Hashdex Crypto ETF Allocates 100% of Initial Staking Yields and 40% of Additional Income

Hashdex will utilize crypto from its Nasdaq CME Crypto Index ETF (NCIQ) for staking, with the sponsor taking the first slice of net income. Common shareholders will share in rewards after surpassing an annual threshold. A July 23 Form 8-K identified Coinbase Cloud as the initial staking provider, with staking expected to commence soon. Under the July 23 prospectus, the staking provider retains its share of gross rewards, while Hashdex receives net staking income up to 0.25% of common-share net asset value through a Sponsor Share. Income above this threshold is split 40% to Hashdex and 60% to the trust for common shareholders. The threshold is assessed annually and prorated for partial years. For example, if net staking income reaches 1% of common-share NAV, the trust would receive 0.45% for common shareholders, while Hashdex collects 0.55%. The Sponsor Share return is separate from NCIQ's 0.25% annual management fee. Provider fees vary, with an 8% fee on gross ether staking rewards, 8% for Solana, and 5% for Cardano. As of July 26, Ethereum made up 11.75% of NCIQ's holdings, Solana 3.17%, and Cardano 0.49%, totaling 15.41%. Hashdex aims for a staking range of 10% to 20% of total fund NAV. The benefits depend on the assets staked, commitment levels, network reward rates, and provider deductions, with potential complications for redemptions and rebalancing.

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