Decentralized finance (DeFi) protocol YieldNest has introduced a new liquid staking derivative (LSD) called ynLSDe, designed to capture restaking yield from EigenLayer, as announced on August 21.
This new token allows holders of Ether staked through platforms like Lido, FRAX, Origin Protocol or Mantle to earn additional yield through restaking. Each of these platforms issues its own LSD.
Restaking involves using Ether (ETH), which has already been staked on the Ethereum network as collateral with a validator, to secure other protocols simultaneously. By taking on additional risk, restaking can significantly increase rewards.
The concept of restaking gained traction with the launch of EigenLayer, a restaking protocol on Ethereum, which has amassed approximately $12 billion in total value locked (TVL) since 2023, according to data from DefiLlama. Liquid restaking protocols, such as Ether.fi and Puffer Finance, contribute another $11 billion in TVL.
EigenLayer supports a growing ecosystem of “actively validated services” (AVS), including protocols like EigenDA, eOracle and Lagrange State Committees, all of which are secured using EigenLayer’s restaked ETH.
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To obtain ynLSDe, users can deposit stETH (Lido), sfrxETH (FRAX), mETH (Mantle), or OETH (Origin Protocol) into YieldNest’s restaking pool. The ynLSDe token acts as a tradable and liquid receipt representing the underlying yield-generating restaked token, with rewards distributed back to ynLSDe holders.
Receipt tokens like ynLSDe provide users with the ability to restake their assets while maintaining liquidity, allowing them to participate in other DeFi activities. However, this approach also introduces additional risks.
As noted by Mike Silagadze, CEO of Ether.fi, “The risk of restaking has not been fully characterized yet.”
YieldNest also mentioned that their protocol aggregates multiple sources of potential yield for users, including EigenLayer Points, YieldNest Seeds, yields from AVS and even AVS Airdrops, on top of the yield from staked ETH.
Cre: cointelegraph.
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