I’ve been mulling over LSTs and re-staking lately, and the more I think about it, the more interesting it feels—and it’s also a bit unsettling.

Where does the yield come from? Put simply, it’s a “consensus premium” that’s nested layer upon layer. You stake ETH to get stETH, then you take that stETH and stake it again on other protocols to earn points/coins. In other words, the same underlying asset is effectively being re-pledged over and over again. Each step gives you a receipt, and each receipt can be recombined and partnered again—like building with blocks. But the catch is: the higher you stack the blocks, the less that bottom piece can move.

The risk I’m most afraid of is “unclear sources of returns.” A lot of re-staking protocols advertise an annualized yield—but where exactly is it coming from? Is it from real demand (for example, renting secure infrastructure like cross-chain bridges or oracle networks), or is it just token emissions as subsidies? If it’s the latter, then it’s basically inflation being used to fund the yield—somewhat like the yield spiral you see in chain games where profits are kept going by printing tokens. Once the studios come in, the token price first collapses, and then all the players leave. Whenever I see a yield rate that’s unbelievably high, my stomach drops a bit.

I’m not sure I’m explaining it clearly. Anyway, for now, I’ll leave it at that. If I could keep just one habit, I’d choose: “periodically check the protocol’s underlying logic, not the yield rate.”