YieldNest is a decentralized liquid restaking protocol that allows ETH holders to natively restake their ETH into EigenLayer and earn rewards without sacrificing liquidity. ^[1][2]

Overview

Launched to the mainnet on May 14, 2024, YieldNest is a protocol designed to form a symbiotic relationship between stakers, Node Operators, and Actively Validated Services (AVSs). The protocol maximizes Yield for restakers and Node Operators by providing a protocol to connect restakers with Node Operators in a trust-minimized manner and simplifying the process of running ETH validators and Actively Validated Services on EigenLayer. ^[1][3]

The introduction of a Liquid Restaking Token (LRT) reduces the opportunity costs for stakers, who can secure Ethereum while taking advantage of various yield-bearing opportunities in crypto. This also benefits Ethereum since reducing the opportunity cost of staking should induce more ETH staked. ^[4]

Other features and offerings by YieldNest include an Isolated deposit pool, Transparent Curated AVS Baskets, Isolated AVS strategies, Independent Risk Team to monitor protocol risks and issues, and a Symbiotic relationship between the AVS, Operators, and Restakers. ^[4]

EigenLayer

EigenLayer is a protocol built on Ethereum that provides an open marketplace for Ethereum’s trust via a new primitive in crypto-economic security called restaking. ^[7]

In particular, EigenLayer allows existing Ethereum validators to set their staking withdrawal credentials to the EigenLayer smart contracts and opt into securing other protocols that require their own distributed validation mechanisms, including rollups, sidechains, cross-chain bridges, oracles, and trusted execution environments, leveraging the same staked ETH as collateral. These protocols, which EigenLayer dubs Actively Validated Services (AVSs), can then impose additional slashing conditions on the validator’s restaked ETH or other ERC-20 tokens. ^[7]

Funding

On April 17, 2024, YieldNest announced the successful closure of its contribution round, raising $5.2 million. Backers included Faculty Group, Backed VC, Michael Egorov, Loi Luu, Proof Capital, LVT Capital, Contango, Mozaik Capital, Kahuna, Rana Capital, Insignius Capital, CKC, and angel investors. ^[11]

“We are proud and happy to have the early support of our contributors, angels, and advisors who share our vision for the future of restaking and LRTs. The oversubscribed round is a testament to the confidence in our approach. We see restaking as more than just a way to earn extra yield on ETH. It’s the solution to Ethereum’s modular roadmap, with applications traversing even beyond the blockchain stack. We are thrilled to contribute to this long-term vision.” – Amadeo Brands CEO & Co-Founder YieldNest^[10]

ynETH

YieldNest offers two categories of tokens, Liquid Restaking Tokens (LRTs) and native Liquid Restaking Tokens (nLRT). ^[4]

LRTs represent restaked Liquid Staking Tokens (LSTs) or ERC-20 tokens that earn rewards from AVSs and any base staking reward. nLRTs eliminate the need to acquire LSTs, by allowing users to directly stake ETH into EigenLayer. ^[4]

ynETH is an nLRT that exposes users to a dynamically curated Basket comprising AVSs across multiple industry verticals. The YieldNest DAO carefully selects and fully vets all the operators and AVS within ynETH’s Basket to deliver an nLRT with the highest possible risk-adjusted yield. Restakers deposit ETH into YieldNest’s restaking pool and receive ynETH back as a tradable and liquid “receipt” token representing the underlying yield-generating restaked ETH. The generated restaking rewards are distributed back to ynETH holders, veYND tokens, and operators. ^[5]

ynETH is not a rebasing token, meaning that the amount of ynETH held will not change over time. Instead, the underlying value of the token will increase as the rewards auto-compound and accrue to the token on-chain. ^[5]

Utility

• Controlled Exposure: Holding ynETH allows users to earn boosted yields by restaking ETH to a pre-selected and carefully vetted Basked of AVS categories—all by simply holding a single liquid token.
• Providing Liquidity: Users can use ynETH to provide liquidity to external DeFi protocols like Curve that support ynETH pools to earn additional revenues from swap fees and liquidity mining.
• Lending/Borrowing: Users lend ynETH on decentralized money markets like Aave or Euler or use it as collateral to borrow other assets, including ETH or various stablecoins. Furthermore, users could leverage their ynETH by borrowing ETH against it and depositing that ETH back to YieldNest to acquire even more ynETH.
• Realizing Restaking Profits: Holders can always withdraw their ynETH for the underlying ETH plus the accumulated restaking revenue from AVSs on YieldNest or swap ynETH for ETH on decentralized exchanges for like-kind assets like Curve. ^[5]

YieldNest DAO

YieldNest incorporates a DAO and sub-DAO structure to let the community make significant decisions regarding the protocol. Its goal is to foster a self-sustaining, decentralized protocol that can eventually operate independently of the core development team. The governance structure will incorporate chambers. Each chamber will consist of a group of leaders who manage it. Leaders are elected based on staked YND tokens, and each chamber votes on a specific category of issues. ^[6]

YieldNest Loyalty Program

Seeds Program

The YieldNest seeds program is designed to recognize and reward active engagement from community members and partners. YieldNest believes that early adopters play a significant role in the growth and success of the ecosystem. Therefore, through the seeds program, YieldNest aims to connect the dedication and support of users to tangible rewards, including participation in future airdrops. ^[8]

The accumulation of seeds is a measure of contribution and a stake in future rewards that YieldNest will distribute. ^[8]

Pioneer Program

YieldNest's Pioneer Program is for early users who support the growth and future of the protocol. This program is available to anyone who restakes their ETH on YieldNest. YieldNest’s Pioneer Program is designed to reward the earliest and most devoted community members and is only available for a limited time. ^[9]