Recently, someone asked me again where the returns from LST/re-staking come from.

Honestly, there are two sources: one is the "system-issued" staking rewards originally given, and the other is you lending out the same trust again.
If others are willing to pay (either genuine demand or emotional + leverage), you can take a share.
It sounds appealing, but the risks are quite straightforward: if the underlying layer gets compromised, the contract/node issues, or the re-staking layer gets exposed, the losses are not just additive—they could be a chain reaction.
Right now, I see this thing as a bit like the heated debate over "compliance boundaries for coin mixing":
Everyone wants more freedom/higher yields, but when faced with regulation or black swan events, they start blaming each other.
Anyway, I still have my old habits—multi-signature, minimizing permissions where possible, and if I can't earn, then so be it.
Let's not get into that for now.