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When you first exit the Maxos' Temple onto Sentinel Island continue straight ahead toward the rocks directly in front of the temple. The Crazy Hermit lives in a cave inside these rocks. When you first meet him, he tries to cast ridiculous spells on you that fail to work and runs to the back of the cave after realizing they aren't working. If you follow him and then talk to him, you can receive the quest From Soup to Nuts and also trade with him. After accepting the quest you can go retrieve the wyvern egg over by Vacca's cave. If you can't make it to the nest, try and complete the quest Ghostbuster where Vacca gives you the wyvern salve.
In return for the egg, the Crazy Hermit will give you the key for a chest located close to the cave.