You've probably already figured it out by now but just in case, I'll be helpful anyway seeing how as no one else was willing to help. What you're looking for is "Moth Dust". It can be bought from either the witch or Shira after you retrieve Shira's lockbox from the abandon hut when she sends you on an errand for it. I think it cost 25 silver ea. Shira was the woman from the pillory in case you don't remember or know. You can find her in the southwest hut of the village with the wind chimes on it.
If you brought the moth dust with you and it does not give you the option to use the moth dust to poison the nest/ eggs
in the cave where you find Shayla, that means you probably still have to talk to the blood fey in the east to get the event to trigger. She will tell you how to save Shayla (after retreating the 1st time from the battle with Shayla.)
Extra info: Moth Dust can be made into Ritual incense later if you save Shayla. Used to craft witch accessories and equipment. So feel free to buy some extra and put in a stash for later use.
MASSIVE SPOILER WARNING: CURRENT END OF v7.05 - 7.06 : Saving Shayla has some end game changing consequences... In doing so you will gain a 3rd party member (Shayla) & gain the ability to cast spells after you make the new witch stuff in the attunement circle she allows you to use for saving her, but upon trying to pay tribute to the frog statue or donating a troll head to it, you will no longer be able to trade to the witch since you basically will end up destroying her spirit god in doing so... You have enraged the frog spirit god (Basically the witches husband) for defiling its sacred trees with the drops of blood you willingly gave for the Blood fey... Kara was tricked... If only there was another way... Upon defeating the frog spirit god you will forever be locked out of the witch hut area by overgrowth. So unless you can skip the part where you donate blood there is nothing can be done about it if you want Shayla in the party and the ability to cast spells other than healing... I want very badly to be able to get back on the witches good side and explain how Kara was deviously tricked by the Blood Fey but alas, that's how the game ends for now in v7.06. From my perspective, at this point, Shayla still deserves to be rescued, Kara deserves forgiveness from the witch for being tricked, & the Blood Fey or Red Maiden deserves to die. Need a strand of her hair for crafting a blood necklace anyway... That's all. Enjoy the game.