They are certainly not FDIC insured, but to their "credit" when you attempt to stake any money with them they are quite upfront about this fact. In other words, if you are hacked, or they are hacked, or the underlying (USDC/Tether/DAI/etc) goes bust, you have no recourse. It's certainly not without risk, but the level of risk of a default/loss event is in the eye of the beholder. Caveat emptor.

The way they are able to offer such high rates is they partner with large institutions who wish to take on extreme leverage/margin in order to short cryptocurrencies or leverage-long play them.

These institutions and high-net-worth individuals have no problems paying 30%+ APR on a crypto loan (coming from many such individual users' staking vaults) because they tend to hold their positions over days or weeks, not years.

To add to why they might do this, their potential for profit (arbitrary e.g. shorting BTC at $62k and closing at $59k; or 5x leverage-buying BTC at $50k and closing the position at $53k) is tremendously high considering how volatility cryptocurrency markets are; far higher than the interest they pay to Crypto.com/Coinbase/Gemini/Kraken/any of these other services which offer 8-12% APY yields to retail users.