Prepare the syrup: In a saucepan, combine the water, sugar, honey, cinnamon sticks, and lemon juice. Bring it to a boil, then turn off the heat. Set the syrup aside to cool completely.
Activate the Yeast: In a small bowl, combine the warm water, dry yeast, and sugar. Stir gently and set aside for 5-10 minutes until frothy, indicating the yeast is active.
Make the Dough: In a large bowl, combine the flour, salt, olive oil, lemon juice, and water. Add the yeast mixture and mix well until the dough is smooth but wet and runny. This consistency is normal for loukoumades. Cover the bowl with plastic wrap and let it rest in a warm place for about 1-2 hours, or until the dough doubles in size and you see lots of air bubbles on the surface. This is a sign that the dough is ready.
Heat the Oil: Heat vegetable oil in a large pot to fully submerge the dough balls. You want the oil temperature to be around 165°C for a perfectly crispy and fluffy result.
Shape and Fry: Dip your hand into the dough and squeeze a portion between your thumb and index finger to form balls of dough. Use an oiled spoon to scoop the dough ball off the top, creating a smooth, round shape. Carefully place the dough into the hot oil. Repeat with the rest of the dough, frying a few at a time until they turn golden brown. Remove with a slotted spoon and drain on paper towels.
Coat in Syrup: While the loukoumades are still hot, dip them briefly (about 10 seconds) into the cooled room temperature syrup, making sure they are well-coated. Remove and place them on a wire rack/ drip tray to drain any excess syrup.
Garnish and Serve: After the syrup has dripped off, garnish your loukoumades with extra honey, a sprinkle of cinnamon, and crushed walnuts. Serve immediately and enjoy while they’re warm!