Tokenomics
YieldNest token economic model
Last updated
YieldNest token economic model
Last updated
Initially, YieldNest will target a specific market segment comprising restakers, operators, and AVSs. It aims to embrace simplicity, enable nimbleness, and develop a symbiotic relationship with all potential stakeholders.
The system has three participants:
YND Token Stakers: YND token holders can stake their tokens to earn 10% of the fees paid by the restakers as a commission on the profits earned. No other company or person receives this money. Token stakers earn all of the "earnings" from the system.
Restakers/End Users (EigenLayer Users): These users deposit their staked assets into the YieldNest protocol to access fully managed, risk-adjusted ETH restaking yields. In return, they pay a 10% commission on their profits to the YieldNest DAO or YND token stakers. YieldNest aggregates various system rewards, including Ethereum staking rewards, AVS rewards, AVS bribes, and staking MEV to generate yield for restakers.
AVSs and Node Operators within EigenLayer: YieldNest delegates restakers' funds to EigenLayer operators, which are then utilized to provide crypto-economic security to AVSs. AVSs, in return, reward the operators and restakers for their services.
This text outlines YieldNest's tokenomics, which incorporate vote-escrow tokenomic principles, backing the YND token with a YND:ETH LP token. Like most traditional vote-escrow tokenomic models, the YND:ETH LP tokens will be locked in a smart contract. The longer the lock period, the more veYND tokens stakers will receive. This mechanism encourages long-term holding and governance participation and ensures deep liquidity for YND.
Token Locking for veYND: Users can provide liquidity for the YND:ETH pair on decentralized exchanges and then stake the LP token to dedicated YieldNest smart contracts to receive veYND tokens that grant them governance power.
Benefits: Aligns stakeholder interests, encourages long-term governance participation and ensures deep liquidity for the YND token.
veYND token holders will earn a 10% commission on profits generated by YieldNest restakers/end users.
This strategic change aims to reward long-term commitment and governance participation by distributing a portion of the protocol's revenue to veYND holders, emphasizing their crucial role in the ecosystem's success and sustainability. Additional rewards for long-term participants include more voting power for extended locking periods.
veYND holders will have governance authority within YieldNest DAO, enabling them to make decisions about protocol upgrades, DAO treasury management, AVS whitelisting, YND emissions, and overall strategic direction.
The specific mechanics of the DAO are still being defined. However, YieldNest is confident that this governance model will substantially benefit YND holders and the YieldNest protocol.
The EigenLayer whitepaper suggests that, in the future, staking LP tokens will facilitate a yield stacking route from L1 → DeFi → EL.
Once this feature is released, YieldNest can offer veYND holders additional yield opportunities on top of the 10% commission on generated profits by incorporating EigenLayer DeFi strategies.
YieldNest will soon release more details about the DeFi strategies powered by EigenLayer and how they integrate with veYND tokenomics.
