These days, I saw the group arguing again about whether the extreme funding rate is a reversal or just a bubble squeeze.

I ended up flipping through the yield structure of LST and those re-pledge protocols…
It seems many people treat "an extra layer of yield" as free money, but the more I look, the more it seems like risk is being unpacked and bundled again.

To put it simply, the underlying of LST mainly still comes from that "original cash flow" of staking rewards,
and the additional part of re-pledging is more about exchanging "safety/ tail risk":
for example, if you reuse the same collateral for other services, you earn the incentives and premiums they give,
but you also take on penalties, contract vulnerabilities, de-pegging liquidity, and all that.
When the rates are extreme, it’s even more obvious—everyone’s emotions run high, leverage stacks up, and the congestion of on-chain collateral also increases.
When something goes wrong, it’s not just losing a little yield, but liquidity gets squeezed, and everyone suffers together…
Right now, I only focus on two things: whether the yield is sustainable in the long term, and whether I can accept the worst-case scenario.
Other things, I’ll leave it at that for now.