In a move that’s set to shake up the decentralized finance (DeFi) landscape, YieldNest has launched a new liquid staking derivative (LSD) known as ynLSDe. This innovative token is designed to capture additional yield from restaking via EigenLayer, a prominent restaking protocol on Ethereum. Here’s everything you need to know about this exciting development and what it means for DeFi enthusiasts.
What’s the Buzz? Introducing ynLSDe
On August 21, YieldNest announced the release of its new token, ynLSDe, which aims to revolutionize how stakers can maximize their rewards. This new liquid staking derivative allows holders of Ether (ETH) staked with major platforms like Lido, FRAX, Origin Protocol, and Mantle to earn even more through restaking.
So, what exactly does ynLSDe do? The token enables users to take Ether that’s already been staked as collateral with a validator on the Ethereum network and use it to secure additional protocols simultaneously. The idea is that by taking on extra risk, restaking can significantly boost your rewards.
How Restaking Works and Why It Matters
Restaking has gained traction since the introduction of EigenLayer, a protocol designed to enhance Ethereum’s staking ecosystem. EigenLayer has attracted a massive $12 billion in total value locked (TVL) since its debut in 2023, according to DefiLlama. Similarly, other liquid restaking platforms like Ether.fi and Puffer Finance collectively hold around $11 billion in TVL.
EigenLayer supports a variety of “actively validated services” (AVS), such as EigenDA, eOracle, and Lagrange State Committees, all of which use restaked ETH to secure their operations. By integrating with these services, restaking can not only increase yield but also strengthen the overall Ethereum network.
How ynLSDe Fits In: The Mechanics of the Token
YieldNest’s ynLSDe token simplifies the restaking process for users. To get ynLSDe, you can deposit stETH (from Lido), sfrxETH (from FRAX), mETH (from Mantle), or OETH (from Origin Protocol) into YieldNest’s restaking pool. ynLSDe then acts as a tradable and liquid “receipt” token, representing the underlying yield-generating restaked assets.
The beauty of ynLSDe is that it allows users to maintain liquidity while participating in restaking. This means you can still use your staked assets in other DeFi activities, providing greater flexibility. However, it’s important to be aware that while restaking can amplify rewards, it can also increase risks.
The Flip Side: Understanding the Risks
Mike Silagadze, CEO of liquid restaking protocol Ether.fi, pointed out on August 12 that the risks associated with restaking are still not fully understood. It’s crucial for users to be aware of the potential downsides and conduct thorough research before diving into restaking strategies.
Maximizing Yield: What to Expect from YieldNest
YieldNest’s approach is designed to aggregate all possible sources of yield for users. This includes not only the returns from EigenLayer but also YieldNest Seeds, AVS yields, and even potential AVS Airdrops on top of the yield from staked ETH. By combining these various sources, YieldNest aims to offer a comprehensive yield optimization solution.
In summary, YieldNest’s ynLSDe token represents a significant leap forward in the world of liquid staking derivatives. By integrating with EigenLayer and other DeFi protocols, it offers users the opportunity to maximize their returns while retaining liquidity. As with any innovative financial instrument, it’s essential to weigh the benefits against the risks and stay informed about the evolving DeFi landscape.
