wait... is it still incest if she was retconned via timey wimey into an entirely different species?
clearly you are not blood related anymore
It's complicated. Lilaya was our aunt in the former world and she still sort of is in the demon world, but also not really.
Neither Lilaya nor Meraxis are blood related to Lyssieth though they have been turned into demons by her (btw Meraxis' not blood related to Lilaya either). There are two ways of becoming a demon; either born as one or turned into one. There's another gimmick in the lore, whether you're born or corrupted into one, the only way to become an "heir" is to be recognized as one. In essence, it's like going to an orphanage where every kid is yours you but you have chosen only one or two to become your de facto children. Lilaya and Meraxis are "sisters" because they have both been accepted by Lyssieth as "official" daughters.
I don't remember if Lyss accepts us as well (it would make it 3 "sisters") or if she only makes us an "unofficial" daughter. I think it's the latter because I remember her saying something like "Lilith doesn't like humans and she doesn't want us to be nice to them either. If I recognize you officially as my daugther Lilith would take notice and come snooping and we're kind of plotting against her sooooo... sowwy... I still love you though! *kisses and romps*" Something like that. I would have to play again to be sure.
I feel like only blood-demons should be considered descendants for the purpose of incest, after all, they are actually blood-related whereas the others are merely transformed into one via corruption and "adopted" into the fold. This means, IMO, that none of us are really related to Lyssieth (the MC, Lilaya and Meraxis). The only person you could make a case for being blood-related is Lilaya and ourselves and even that is a bit sketchy in the demon world because of the time and reality manipulation that happened.
If you decide to accept that everyone's related regardless of blood, then becoming a demon means Lilaya is both your aunt and your sister. Take that for a twist! :^D