Deep Dives
Staking Circle
Staking Circle
Mar 21, 2024
9 min read

Exploring AVSs w/ YieldNest

Exploring AVSs w/ YieldNest

YieldNest is leading the way in Defi with its Liquid Restaking Protocol and ambitious plans to incorporate AI and IoT, aiming for unparalleled interoperability across blockchain tech. The latest AMA provided a complete overview of YieldNest’s activities, from its relationship with LAMA risk for AVS risk analysis to its open appeal for partnership in AVS development.

For enthusiasts and specialists interested in learning more about YielfNest’s strategy and its implications for the future of Defi, the full highlights and transcripts below provide a treasure trove of information. Join us as we decipher the complex discussion defining the next wave in the Defi space:

X Spaces: AVS from the Perspective of a Liquid Restaking Protocol YouTube: AVS from the Perspective of a Liquid Restaking Protocol Spotify: AVS from the Perspective of a Liquid Restaking Protocol



  1. AVS Introduction
  2. YieldNest Fi Overview
  3. AVS Potential and Challenges
  4. AVS Migration and Solutions
  5. AVS Calibration with Liquid Restaking
  6. AVS Evolution and Future Trends
  7. Blockchain Technology and AVS Development
  8. Isolated LRTs and Node Operators
  9. Integration and Application of AVSs
  10. AVS Growth and Risk Analysis
  11. Collaboration and Innovation

1. YieldNest Fi Overview

  • DeoBrands provided a short overview of YieldNest as a Liquid Staking Protocol:

“So YieldNest is a liquid restaking protocol and we are basically developing liquid restaking and in the staking space already for quite some time now. (...) we're building a kind of a liquid restaking protocol with the eyes and the vision of the future of what liquid restaking is and what restaking is going to become”

  • An increase in liquid restaking interest was noted due to the introduction of Actively Validated Services (AVSs):

"And I'm very excited about liquid restaking and very excited about active validated services because I think this is a new DeFi primitive that is going to carry the new cycle, the new bull cycle forward. And I believe that AVS and restaking going to issue in real-world use cases for blockchains"

  • Noted the completion of a seed funding round for YieldNest and the onboarding of new advisors from Yearn and Curve:

“We're closing our seed round at the moment. We are onboarding a lot of new advisors from Yearn and Curve. We have a lot of really cool angels on board, which I'm not going to tease yet”

2. AVS Potential and Challenges

  • AVS is positioned to enhance security across multiple chains and extend Ethereum's security model off-chain:

“Now we can use this layer one security, which is kind of expensive, but we can use the layer one security, set the economic assets there, and then use that economic security for off-chain purposes.”

  • Challenges include clarifying custom slashing conditions and ascertaining required security amounts for AVS:

“But how does an AVS define exactly the certain slashing conditions and how does an AVS get the amount of nodes that it's needed and the amount of economic security? I think there are still a lot of question marks and unclarity around that and EigenLayer will release more info about that soon”

3. AVS Migration and Solutions

  • YieldNest is actively partnering with various AVSs and looking for more collaborations:

“There's a lot of AI protocols that probably will use these active validated services in their technology stack. And we're actively looking at building out categories, as I said. In my vision, there's not going to be just 10 or 20 AVSs. I think there's going to be hundreds or thousands or hundreds of thousands of active validated services in the future.”

  • DeoBrands is actively tracking AVS projects like AltLayer, Dorsa, ExpressOS, SpiceAI, and considering Fetch AI for their AI use cases:

“We're looking at, you know, Dorsa, we're looking at Outlayer, we're looking at Expressor system. I'm still trying to contact Spice AI, which I really like their use cases. And I think that's a good thing. I think Spice AI is very interesting, Witness Chain, Fetch AI.”

  • The importance of properly categorizing AVSs to inform risk parameters and slashing conditions was stressed with speculation on potentially thousands of AVSs:

“But right now, our challenge is like Trying to onboard all of them and building partnerships with all of them and then also categorizing them in the right way so that we have clear risk parameters with all these active validated services and all-around all their slashing conditions”

4. AVS Calibration with Liquid Restaking

  • Liquid restaking protocols find technical ease in integrating with an AVS:

“So basically for a liquid restaking or even a retail restaker, it's just about picking the right node, right? So like as a restaker, you don't really pick the AVSs. That's the task of the node operator. So you kind of delegate your restaked capital to a node and the node will then select one or multiple.”

  • YieldNest is developing proprietary tools to monitor and curate AVSs for alignment with their vision of future yields in ETH:

“We are building our own proprietary tooling to actually monitor certain nodes and certain AVSs and whitelist them so that we can actually see if a node actually runs the AVS that we want them to run and if a node is not running other AVSs.”

5. AVS Evolution and Future Trends

  • DeoBrands predicts that initial AVS advancements would be mostly blockchain-related, with future expansion into AI and IoT:

“So Things like that are coming and then coming back to the AI again, I think when that gets more attention and more knowledge about like, oh, I can run a large language model and I can kind of validate this with an economic layer around that, then I think a lot of people will.”

  • It was agreed that practical integration with AI, IoT, and AVSs would foster interoperability and blockchain ground-based infrastructure:

“Because we've been drumming this AI IoT blockchain thing for a long time. Yeah. There's so much money invested in a lot of vaporware, but I do think that this might finally be the approach that would make more sense. But we still have to see what the full implementation will look like, but it looks promising. “

6. Blockchain Technology and AVS Development

  • DeoBrands mentioned that blockchain's open-source nature is about education and advancing technology, not just about liquid restaking tokens but the new DeFi primitive:

“So the nice thing in blockchain and this open source kind of in the open development that we're doing, it's all just about, you know, educating and trying to move forward this technology, this open technology stack, right? And so it's not only going to be the liquid restaking tokens or things like that, it's just the overall new DeFi primitive”

  • According to DeoBrands, AVSs could make the creation of better Oracle systems, like Chainlink, easier by allowing quick out-of-the-box network construction:

“But through AVSs, we can actually build much better Oracle systems, for example, like Chainlink, where in Chainlink they have this whole validator setup and then they validate. They had certain data points. Well, with an AVS, you can actually build that whole network out of the box very quickly.”

  • AVSs are said to reduce innovation complexity, aiding future blockchain and decentralized systems development, and DeoBrands highlighted that with EigenLayer and Restake, progress in AVSs becomes easier, faster, and more open:

“So I think the future of AVSs will be... Well, speed up the future development of blockchain technology and decentralized systems in general, because AVS has kind of removed the complexity to innovate.”

7. Isolated LRTs and Node Operators

  • DeoBrands compared isolated LRTs and isolated NLRTs, explaining that NLRTs accept natively restaked assets:

“So I think isolated, there's the isolated LRT or isolated NLRT. Well, an NLRT is definitely isolated because it only accepts natively restaked ETH. And then an isolated LRT is basically like, okay, we're isolating a liquid restaking token where we just kind of pick different nodes”

  • Emphasized the need to build a knowledge base with clear definitions and categorization of AVSs:

“And I think we need to make some sort of like agenda or like some sort of a knowledge base where we really form this definition because there's also the thing about which nobody really talks about”

  • Highlighted that isolating specific node operators is just as important as isolating economic assets because you don’t want to run all AVSs, especially as the variety grows:

“I think that's even more important than isolating the economic assets that you mistake, it's also very important to isolate. Which AVSs are we going to run? Because you don't want to run all AVSs. In the beginning, it's probably pretty straightforward, but in the future, when there is, let's say, thousands of AVSs, you don't want to run all AVSs”

8. Integration and Application of AVSs

  • DeoBrands mentioned that while they're not focusing on any one specific AVS, they're broadly speaking with various AVSs and described interest in AVSs that perform parameter research for different liquidity pools:

“I think probably one of the first we need ourselves is something that does parameter research for the different liquidity pools that different LRTs will use. That's something we're looking into right now”

  • Also expressed particular interest in AI and shared sequencing as applications for AVSs:

“As I already said, like AI is kind of probably something that I'm extra interested in because I think that's a good use case and yeah, shared sequencing or any innovative use case of AVSS like, you know, Dorsa I like a lot. It's very interesting.”

9. AVS Growth and Risk Analysis

  • DeoBrands expects exponential growth in the number of AVSs, naming early players like EigenDA and AltLayer, who are far ahead:

“I think it's going to be EigenDA and then AltLayer and then Dorsa and then SpiceAI and it's going to be a handful in the beginning and then it's going to exponentially grow with a lot of new different angles and new different ideas that will explode on this new tech stack. “

  • They announced a partnership with the LAMA Risk team to create a publicly accessible risk analysis framework associated with AVSs and restaking:

“We're forming an independent partnership with the LAMA Risk team, which I also contributed to in the past. And the LAMA Risk team does a lot of risk analysis for Curve Finance and for Prisma Finance, and also other overall risk research.”

10. Collaboration and Innovation

  • DeoBrands emphasized YieldNestfi's commitment to supporting innovative research and acting as stewards of the open innovation platform:

“We're building out risk frameworks and we're categorizing and researching very deeply into all the different angles and different possibilities that AVS will have in the future. So we're mapping that all out right now(...)If you have questions about how to go to market and how to get capital, how to get nodes to work with them, well, we can help them with that.”

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