How the fuck does leveraged staking exist?

Take the JLP/USDT multiply on Kamino. I understand that holding JLP gives you (essentially) interest, and borrowing USDT has a lower interest, so borrowing USDT with your JLP as collateral to invest more into JLP multiplies your return.

How can this system exist? Where is the downside? How can JLP have a better return than it costs to loan USDT? Why don't the people who loan out USDT just put it into JLP instead if that's the case? Shouldn't the loaning apy go up to in relation?

I mean, real life personal loans have a similar apy to borrowing USDT, why not just take out an actual loan to put even more into the system? There has to be some kind of risk/downside that leveraged staking represents, otherwise everyone would be doing it, but I can't seem to figure out what it is.