Hashdex Keeps First 0.25% of NCIQ Staking Income

Hashdex’s Nasdaq CME Crypto Index ETF (NCIQ) will allocate staking rewards through a two-tier waterfall that gives providers their fees first, routes a sponsor payment to Hashdex next, and returns excess rewards to the trust for common shareholders.

A July 23 prospectus supplement and an accompanying Form 8-K name Coinbase Cloud as the initial staking provider and say staking is expected to begin promptly, subject to operational readiness. Provider commissions are deducted from gross rewards before any sponsor or trust allocation.

After provider deductions, Hashdex receives all remaining net staking income up to a dollar amount equal to 0.25% of common-share net asset value via a separate, unlisted Sponsor Share held exclusively by the firm. Any annual net staking income above that threshold is split 40% to Hashdex and 60% to the trust for holders of the publicly traded common shares. The 0.25% threshold is measured over each fiscal year and prorated for a partial year.

The prospectus gives an illustration: if net staking income reached 1.0% of common-share NAV after provider fees over a full year, common shareholders would receive 0.45% and Hashdex would collect 0.55%, comprising the initial 0.25% Sponsor Share allocation plus 40% of the remaining 0.75%.

The Sponsor Share payout is separate from NCIQ’s 0.25% annual management fee and is not netted against that fee. Hashdex lists provider deduction rates by asset: an 8% fee on gross ether staking rewards, an 8% validator commission for Solana and a 5% validator commission for Cardano. As of July 26, Ethereum represented 11.75% of NCIQ’s holdings, Solana 3.17% and Cardano 0.49%; the fund targets staking between 10% and 20% of total NAV.

Staking is described as prospective and subject to operational constraints. Unbonding periods can temporarily lock assets, and validator failures or slashing events can reduce rewards. The filing notes those factors can complicate redemptions and rebalancing and may widen any gap between NCIQ’s NAV performance and its underlying index, but it does not quantify a potential tracking difference.