Core Protocol Flow

The protocol's three core steps explained simply

1

Capital Deposit

Users deposit stablecoins into a Nest vault and receive vault tokens in return. These tokens represent the user’s share of the vault and accrue value as the vault holds value-accruing underlying tokens.

2

Yield Generation

The vault uses the deposited stablecoins to purchase underlying tokens from yield issuers. Yield issuers deploy these stablecoins by lending them to borrowers. As borrowers repay loans with interest, the tokens increase in value.

3

Redemption

When a user wants to withdraw their funds, they burn their vault tokens. If the vault has sufficient liquidity, the withdrawal is processed directly from its reserves. Otherwise, the vault exchanges its underlying tokens with yield issuers to retrieve stablecoins, which are then returned to the user.