How Does YieldNest Work?
YieldNest is a liquid restaking protocol that lets users deposit ETH and receive ynETH, a token that earns yield from both Ethereum staking and EigenLayer AVS rewards. With $24M TVL across Ethereum and BSC, it simplifies restaking participation. The B- risk grade reflects strong auditing (ChainSecurity, Zokyo) and AI-driven monitoring, but notes slashing contagion risk from multi-AVS exposure.
TVL
$26M
Sector
Restaking
Risk Grade
B-
Value Grade
C
Core Mechanisms
8.3.1
EigenLayer-style restaking with ynETH depositing ETH into dynamically curated AVS basket
ynETH restakes ETH via EigenLayer to secure multiple AVSs selected by the YieldNest DAO.
3.4.2
ynETH reward-bearing liquid restaking token representing restaked ETH + AVS rewards
ynETH value appreciates as staking and AVS rewards accrue.
5.1.3
veYND vote-escrow governance controlling AVS selection and protocol parameters
YND staked for veYND; holders earn protocol revenue via buyback-and-distribute.
2.4.1
Revenue-funded buyback-and-distribute from 10% commission on restaking profits
10% of ynETH profits used to buy YND and distribute to veYND stakers.
2.2.2
NovelMAX LRT vault strategies deploying across DeFi and restaking for optimized returns
ynETHx dynamically allocates between DeFi strategies and restaking to maximize yield.
3.2.1
Algorithmic slashing inherited from EigenLayer for AVS misbehavior
AVS slashing conditions enforced by EigenLayer; losses passed through to ynETH holders.
How the Pieces Interact
ynETH holders are exposed to slashing contagion: if one AVS is slashed, all ynETH holders share the loss even though they cannot individually choose which AVSs to support.
Dynamic allocation between DeFi and restaking creates compounding risk: losses from either DeFi failures or AVS slashing affect the same capital pool.
veYND holders control AVS selection; governance capture could lead to high-risk AVS selection increasing slashing exposure.
Predictable buyback patterns for YND enable front-running at protocol expense.
Slashing events cause immediate ynETH value decline; preemptive selling could amplify depeg beyond actual slashing loss.
What Could Go Wrong
- ynETH is exposed to EigenLayer AVS slashing risk — if an AVS misbehaves or is slashed, ynETH holders suffer proportional losses.
- Dynamic AVS basket selection by the YieldNest DAO introduces discretionary risk; poor AVS selection could result in capital losses.
- Layered dependency stack: ynETH depends on Ethereum staking, EigenLayer restaking, and multiple AVS protocols — failure at any layer affects ynETH holders.
AVS Slashing Contagion in ynETH Basket
ModerateTrigger: An AVS in the ynETH basket is slashed due to operator misbehavior or vulnerability.
- 1.AVS triggers slashing on EigenLayer — Restaked ETH allocated to that AVS is slashed, reducing ynETH backing
- 2.ynETH exchange rate drops — Panic selling amplifies discount beyond actual loss
- 3.Other AVSs face confidence contagion — Operators reduce commitments, rewards decline
- 4.ynETH holders rush to unstake — Withdrawal queue creates delays
- 5.YND price drops as revenue declines — Governance participation drops
Risk Profile at a Glance
Overall: B- (33/100)
Lower score = safer