[DigitalToday reporter Yoonseo Lee (이윤서)] Asset manager Hashdex has introduced a structure in which it uses some of the cryptocurrencies held by its Nasdaq CME Crypto Index exchange-traded fund (ETF), NCIQ, for staking, while the manager takes all net annual staking income up to a certain range.

On July 26 (local time), blockchain media outlet CryptoSlate reported that public-market investors in NCIQ common shares can share staking rewards only if returns exceed an annual threshold.

The key is how income is allocated. A prospectus supplement dated July 23 says the staking operator first takes its share from total rewards. The remaining net staking income is then allocated first through 1 sponsor share, an unlisted separate equity interest held by Hashdex. The threshold is a dollar amount equal to 0.25 percent per year of the net asset value of the common shares.

Up to that range, Hashdex takes 100 percent of the net income. Only income generated after that is split 40 percent to Hashdex and 60 percent to the trust, with the trust’s portion going to common-share investors. If net staking income remains at or below the annual threshold, there is no amount allocated to investors.

Hashdex specified that this structure is separate from the existing annual management fee of 0.25 percent. Income generated from sponsor shares is not offset against NCIQ’s annual management fee. Given the cost structure borne by investors, the staking income allocation is designed as a separate revenue source rather than simple additional income.

An example allocation was also provided. If net staking income, after operator fees, reaches 1 percent per year of the common-share net asset value (NAV), the trust’s share for common-share investors is 0.45 percent. Hashdex takes the first 0.25 percent and 40 percent of the remaining 0.75 percentage points, securing a total of 0.55 percent. The document said the figures are only an example and do not indicate an expected return or realised income.

Staking has not yet begun. A Form 8-K filed on July 23 specified that Coinbase Cloud was designated as the initial operator and that staking would begin promptly once operational preparations are complete. The structure is already in place, but actual income is expected to vary depending on which assets are staked and in what amount.

In NCIQ’s current portfolio weights, the main staking-eligible assets are Ethereum at 11.75 percent, Solana at 3.17 percent and Cardano at 0.49 percent, for a combined 15.41 percent. That does not mean the actual staking volume. Hashdex presented a target staking range of 10 to 20 percent of the fund’s total NAV.

The deduction structure also differs by asset. NCIQ’s product page says an 8 percent fee is reflected in total Ethereum staking rewards, an 8 percent validator fee applies to Solana, and a 5 percent validator fee applies to Cardano. As a result, the final return to investors depends on which network is selected, the reward rates on each network and the size of the operator deductions.

Constraints on staking also remain. During the unbonding process, assets may be temporarily locked up, and rewards may decrease if a validator fails or slashing occurs. These variables can also affect redemptions and rebalancing. Related documents mentioned that such constraints could widen the gap between NCIQ’s NAV performance and its underlying price index, but did not quantify the extent.

Ultimately, NCIQ’s adoption of staking is drawing attention in that crypto ETFs are beginning to add additional income structures beyond simple holding. But because Hashdex is designed to take income first, from an investor perspective the more important yardstick than whether staking begins will be how much actual net income can exceed the 0.25 percent annual threshold.