Hashdex's NCIQ Staking Plan Keeps 100% of Initial Yields

Hashdex's new crypto ETF, NCIQ, has introduced a unique staking income structure that rewards investors. Unlike other similar products, NCIQ keeps 100% of initial staking yields and 40% of all subsequent net staking income above an annual threshold.

The first tier of the staking-income waterfall is provider fees, which come before any returns to Hashdex or the trust. After that, excess net staking income is split 40% to Hashdex and 60% to the trust for holders of publicly traded NCIQ common shares.

NCIQ's staking plan includes a target range of 10% to 20% of total fund NAV, with Ethereum, Solana, and Cardano being the primary assets staked. Provider deductions vary by asset, with fees ranging from 5% to 8%. The framework is prospective, meaning that staking income will be earned over time.

However, there are potential risks and complexities associated with staking, including unbonding, validator failures, or slashing, which can reduce rewards. These constraints may also complicate redemptions and rebalancing, potentially widening the difference between NCIQ's NAV performance and its underlying price index.