Interesting quandary. As a loose analogy, isn't this roughly equivalent to what commercial banks do? They hold the funds, then use that value to generate additional value?
But you don't pay a bank to hold your money do you? imagine paying a bank 1.2% a year to hold on to your cash? infact the obverse is true, banks pay you so you deposit funds with them, therefore they use those funds to generate profit to pay your interest.
Drifting dangerously off topic, but you'd be surprised how much people are really paying their banks, indirectly. All the costs are hidden, whether it be through inflation, or the mark-up you pay on goods and services designed to cover the fees retailers have to pay to the banks. The interest they "pay you" doesn't actually cover the true cost you pay to rely on them. They definitely aren't upfront with the public about how they earn their money. Perversely, their methods are not just deemed societally acceptable, but fundamental to the continuation of the traditional economy.
But that's partly what we're all here to shake up with crypto, so the discourse on whether such practices should be frowned upon here is still positive.