Restaking startup YieldNest builds novel liquid restaking token on EigenLayer

Quick Take

  • YieldNest’s new liquid restaking token, ynLSDe, is designed to earn additional yield from liquid staking platforms including Lido, FRAX, Origin Protocol and Mantle to earn additional yield.
  • YieldNest previously released the ynETH token, a native restaking token that taps into a trading strategy managed by the YieldNest risk management team.

Restaking startup YieldNest is launching a new token, tapping into the burgeoning liquid staking derivatives market. Called ynLSDe, the system is designed to enable anyone with ether staked on major decentralized liquid staking platforms including Lido, FRAX, Origin Protocol and Mantle to earn additional yield. 

Liquid staking derivatives (LSD) are tokenized representations of staked assets that can be used in various DeFi protocols. Normally when ETH is staked — a process that pays rewards to users for helping secure the Ethereum network — it cannot be traded. LSDs route around this by creating a proxy token that can be used elsewhere while the underlying ETH remains staked.

Restaking takes this process a step further by enabling users to take their LSD tokens and deploy them again to secure additional decentralized services. Likewise, ynLSDe builds on this restaking trend. Restaking, pioneered by juggernauts like EigenLayer, has grown into a $50.5 billion market, according to DeFiLlama data.

Restaking advocates argue the system helps improve the security of smaller blockchain apps that may otherwise fail to garner the necessary capital and community support needed to make proof-of-stake security systems functional.

“Users get ynLSDe by putting stETH (Lido), sfrxETH (FRAX), or mETH (Mantle), OETH (Origin Protocol) into YieldNest’s restaking pool. ynLSDe acts as a tradable and liquid ‘receipt’ token representing the underlying yield-generating restaked token. The generated restaking rewards are distributed back to ynLSDe holders,” the team wrote in a statement.

YieldNest then aggregates the potential yield earned from restaking platforms including EigenLayer Points, YieldNest Seeds and other “actively validated services” (the general term for the dapps being secured by restaking protocols). The platform offers several curated baskets of different yield-bearing strategies tailored to different risk appetites.

YieldNest previously released the ynETH token, a native restaking token that taps into a trading strategy managed by the YieldNest risk management team.

The platform, built on EigenLayer, is backed by Faculty Capital, Backed VC and Proof Capital, among others. Its angel investors include Curve founder Michael Egerov, Kyber founder Loi Luu and FRAX founder Sam Kazemian.


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About Author

Daniel Kuhn is a Senior Journalist and Editor at The Block, where he covers the crypto industry with a particular focus on tech. He previously served as deputy managing editor of opinion/features at CoinDesk. He first appeared in print in Financial Planning, a trade publication magazine. Before journalism, he studied philosophy as an undergrad, English literature in graduate school and business and economic reporting at an NYU professional program. You can connect with him on Twitter and Telegram @danielgkuhn or find him on Urbit as ~dorrys-lonreb.

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