Recently, I've been looking at LST/re-staking again, and I feel like many people are over-simplifying the idea of "an extra layer of profit." Frankly, the profits mainly come from two parts: one is the original staking consensus rewards, and the other is the "rent" you earn by selling the same security to other service providers. It sounds attractive, but the risks are quite straightforward: if the underlying chain has issues, you suffer first; if the external service providers have accidents (code, governance, malicious acts), you could also be implicated. The most annoying part is that when correlations come into play, both the LST price and redemption liquidity can lock you out at the same time.

These days, some people interpret large on-chain transfers and abnormal movements in exchange hot and cold wallets as "smart money"... I actually care more about: who are the real payers of these protocols, where does the continuous inflow of money come from, and how are the penalty rules actually implemented? Second chances can wait, but stepping into a situation where "profits depend on subsidies to survive" is no longer interesting.