YieldNest has launched a new liquidity recovery token.
Decentralized finance (DeFi) protocol YieldNest is working on a new Liquid Stacking Derivative (LSD) called ynLSDe from EigenLayer, which is designed to capture repos, according to an August 21 announcement.
The token “enables Ether holders with Lido, FRAX, Origin Protocol or Mantle to receive additional yield… by repacking,” YieldNest says. Lido, FRAX, Origin and Mantle are decentralized Ethereum staking platforms, each issuing their own LSD.
Rescheduling involves taking previously staked Ether (ETH) – escrow with a validator in exchange for a reward – on the Ethereum network and using other protocols to secure it at the same time. The premise is that retaking instead of taking more risk can increase rewards.
EigenLayer, which has a total value locked (TVL) of nearly $12 billion by 2023, has gained popularity since its launch.
Liquidity rebalancing protocols like Ether.fi and Puffer Finance account for another $11 billion in TVL, the data shows.
Fluid restoration protocols handle more than a billion TVLs. Source: Defillama
Related: Reset is ‘inevitable', but the risks are still uncertain – Ether.fi CEO
EigenLayer supports the growing number of “Active Authentication Services” (AVS) – protocols such as EigenDA, eOracle and Lagrange State Committees that secure themselves using the ETH held back by EigenLayer.
“Users will earn ynLSDe by depositing stETH (Lido), sfrxETH (FRAX), or mETH (Mantle), OETH (Origin Protocol) into the YieldNest repo pool,” said YieldNest. “ynLSDe is a reinvested token that generates an underlying product that acts as a tradable and liquid ‘receipt' token. The generated Replay Rewards will be distributed to ynLSDe holders.
Acceptable tokens like ynLSDe “allow users to hold their assets while maintaining liquidity, meaning they can still use their held assets in other DeFi activities,” according to YieldNest. However, LSDs can make accidents worse.
“The risk of regrouping is not yet fully defined,” said Mike Silagaze, CEO of the liquidity recovery protocol Ether.Fi, on August 12.
According to YieldNest, the protocol aggregates all sources of potential yield for users, including EigenLayer Points, YieldNest Seeds, obtained from [AVS]And even AVS Airdrops are more than the captured ETH production.
