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08/20/2024

YieldNest Launches New Liquid Restaking Token

YieldNest, a decentralized finance (DeFi) protocol, announced the launch of a new liquid staking derivative (LSD) token called ynLSDe, designed to capture yield from EigenLayer, according to an August 21 announcement. The token "allows holders of Ether staked with Lido, FRAX, Origin Protocol, or Mantle to earn additional yield... through restaking," YieldNest said. Lido, FRAX, Origin, and Mantle are decentralized Ethereum staking platforms, each issuing their own LSD. Restak

YieldNest Launches New Liquid Restaking Token

YieldNest, a decentralized finance (DeFi) protocol, announced the launch of a new liquid staking derivative (LSD) token called ynLSDe, designed to capture yield from EigenLayer, according to an August 21 announcement.

The token "allows holders of Ether staked with Lido, FRAX, Origin Protocol, or Mantle to earn additional yield... through restaking," YieldNest said. Lido, FRAX, Origin, and Mantle are decentralized Ethereum staking platforms, each issuing their own LSD.

Restaking involves taking already-staked Ether — pledged as collateral to a validator in exchange for rewards — on the Ethereum network and using it to simultaneously secure other protocols. The idea is that by taking on additional risk, restaking can significantly boost rewards.

Restaking gained prominence after the launch of EigenLayer, a restaking protocol on Ethereum that has attracted approximately $12 billion in total value locked (TVL) since 2023, according to DefiLlama data.

Liquid restaking protocols — such as Ether.fi and Puffer Finance — currently hold an additional ~$11 billion in TVL, the data shows.

Liquid restaking protocols hold over $11 billion in TVL. Source: DefiLlama

Related: Restaking is 'inevitable,' but the risks remain unclear — Ether.fi CEO

EigenLayer currently hosts a growing ecosystem of actively validated services (AVS) — protocols such as EigenDA, eOracle, and Lagrange State Committees — secured using EigenLayer's restaked ETH.

"Users receive ynLSDe by depositing stETH (Lido), sfrxETH (FRAX), mETH (Mantle), or OETH (Origin Protocol) into YieldNest's restaking pool," YieldNest said. "ynLSDe functions as a tradable, liquid 'receipt' token representing the underlying yield-bearing restaked token. Restaking rewards are redistributed to ynLSDe holders."

Receipt tokens like ynLSDe "allow users to restake their assets while maintaining liquidity, meaning they can still deploy their staked assets across other DeFi activities," according to YieldNest. However, LSDs can also amplify risk.

"The risks of restaking are still not fully defined," said Mike Silagadze, CEO of liquid restaking protocol Ether.fi, on August 12.

According to YieldNest, the protocol "aggregates all potential yield sources for users, including EigenLayer Points, YieldNest Seeds, yield from [AVS], and even AVS Airdrops on top of staked ETH yield."