Very wise views here. I've generally ignored traditional finance, so I can't offer any balanced thoughts as you have, but get what you're saying.
Much of the inflationary crypto genre carries on as such for a planned number of years. Their "selling point" is that the inflation slows on a set schedule over time, and that it may even convert to a burn model later on. That's often just white paper token issuance/distribution pie chart stuff, as much is a money grab in my eyes. It's competitive out there and projects need to sell opportunity to attract liquidity. Usually, the returns on staking or liquidity providing decline as more capital comes for their slice of the pie, but this demand seems to chew up selling pressure by earlier adopters or those generally farming their yield.
Whether this is the case for some or all, a strong APR is all that over-enthusiastic crypto investors need to hear to feel like there's enough juice to squeeze for a while before moving on to the next one. I can't blame them though because it's better than the last bull run where these options weren't as available -- so it was just buying, holding, or trading asset pairs - versus more incentive to hold for the yield today. Ultimately, there's a lot more locked up now than before, so I don't mind this so much. Some project are merely a means to an end, while there are good ones to stick with.
I suppose the risk is super high, so the rewards match, whether the math behind it makes sense or not.
You're spot on, risk and reward are inevitably tied.
It is unfortunate that new investors are sometimes taken advantage of with a shiny new object like high APR. You generally can't really blame them for what they don't know about it; they see the staking rewards come in and think nothing of the big picture.
I really think the idea of these decentralized projects are here to stay. It probably will turn out like the dot com bubble/crash played out-- many investors got burned as companies went under, yet out of the ashes came Google, Amazon, Facebook, etc, with new fortunes made by investors who came in after the crash.
Microsoft again serves as a good case study for the typical innovation cycle. Buying at the peak in '99/'00 was disastrous for over a decade+ (never fully rebounded in price for a long time), but if you got in after the crash you've easily 10x your money and more.
What's great about being an early adopter is having the opportunity to potentially see those projects that emerge from the ashes before the general public does.
What makes it difficult is how quickly the world changes in technology, and how unpredictable outside forces can sometimes pick the winners and losers.
The antidote, probably, is diversification... also patience and discipline to dollar cost average through a brutal downturn (-80%, -90%, or even -95%+) in the context of a balanced portfolio, and humility and flexibility to invest in the emerging winners even if they aren't part of one's original portfolio (overcome sunk cost fallacy).