For the dragon's nest idea, I think that generating eggs fits more thematically.
Unupped:
Dragon's Nest 8
![Rainbow :rainbow](https://elementscommunity.org/forum/Smileys/solosmileys/../../../images/Misc/rainbow18x18.png)
4
![Rainbow :rainbow](https://elementscommunity.org/forum/Smileys/solosmileys/../../../images/Misc/rainbow18x18.png)
: generates an egg (50% chance to be a dragon egg, 50% chance to be a fate egg)
Dragon Egg (not standalone) 8
![Rainbow :rainbow](https://elementscommunity.org/forum/Smileys/solosmileys/../../../images/Misc/rainbow18x18.png)
1
![Time :time](https://elementscommunity.org/forum/Smileys/solosmileys/../../../images/Misc/time18x18.png)
Hatch into a random unupped dragon
Upped:
Dragon's Nest 10
![Rainbow :rainbow](https://elementscommunity.org/forum/Smileys/solosmileys/../../../images/Misc/rainbow18x18.png)
4
![Rainbow :rainbow](https://elementscommunity.org/forum/Smileys/solosmileys/../../../images/Misc/rainbow18x18.png)
: generates an egg (75% to be a dragon egg, 25% to be a fate egg)
Dragon Egg (upped; again, not standalone) 8
![Rainbow :rainbow](https://elementscommunity.org/forum/Smileys/solosmileys/../../../images/Misc/rainbow18x18.png)
1
![Time :time](https://elementscommunity.org/forum/Smileys/solosmileys/../../../images/Misc/time18x18.png)
Hatch into a random upped dragon
I'm not sure about all the numbers; substitute whatever you think is balanced in.
If you think dragon egg spam is OP, then force the dragon's nest to fallow for a turn or 2 after each generation.