Hashdex Crypto ETF retains 100% of initial pledge income and 40% additional rewards

Hashdex reorganizes the pledge income structure of Nasdaq Cryptocurrency Index ETF

According to an SEC filing filed on July 23, 2026, Hashdex has restructured the pledge income mechanism of its Nasdaq CME Cryptocurrency Index ETF (NCIQ). Under the new arrangement, the fund allocates 100% of the initial pledge income to the promoter's share, while the promoter only shares 40% of the portion exceeding this threshold. This adjustment clarifies the allocation method of pledge income of Hashdex Crypto-ETF and also determines how on-chain rewards flow to shareholders.

How Hashdex splits NCIQ's pledge rewards

The core of the new structure is the hierarchical allocation mechanism. Before the trust receives any income, the promoter's shares will receive all net pledge income within 25 basis points of the net asset value (NAV) of NCIQ's common stock.

Initial promoter allocation: 100% share, with a ceiling of 25 basis points

The SEC supplement issued by NCIQ on July 23, 2026 stipulates that all net pledge income within 25 basis points of the NAV of common stock shall belong to the promoter's share. In short, the "initial pledge income" is the first part of the on-chain reward, with a ceiling of 25 basis points, and the promoter retains every penny of it. The "extra benefits" are all benefits generated by the verifier outside this limit.

Allocation of excess pledge income: 40% goes to the initiator and 60% goes to the holder

Once the net pledge income exceeds the initial threshold, the remaining portion will be allocated to the sponsors 'share at a rate of 40% and 60% to ordinary shareholders in the trust fund. The SEC filing states that when net pledge income exceeds the initial threshold, the excess will be distributed in this proportion.

Hashdex disclosed the change in an 8-K filing on July 23, 2026, and noted that the trust fund has revised its promoter agreement to allow pledges of crypto assets held by the fund. On the same day, the sixth revised and restated trust agreement created a new promoter share category.

It is worth noting that the pledge income of the promoter's share and the NCIQ 0.25% management fee are calculated separately, rather than being deducted from each other. This means that the allocation of pledge income is superimposed on top of the fund's existing fee structure, rather than offsetting the fee.

What this structure means for investors

This design divides excess returns while retaining all basic rewards. Ordinary shareholders will not receive any gains within the initial 25 basis point range, but after that, they will receive a majority of the excess return.

The amount of income that a fund can generate depends on its pledge ratio. The Hashdex product page shows that the target pledge range is 10% to 20% of the total net asset value of the trust fund, so only some eligible assets will be pledged at any time.

Verifier fees are also deducted from the total before revenue is distributed. Pledge service provider fees are: Ethereum accounts for 8% of total rewards, Solana accounts for 8%, and Cardano accounts for 5%. This means that the net pledge income used for 100%/40% hierarchical allocation is already the net value after deducting the fees of these service providers.

The supplementary document to the prospectus warns that ordinary shareholders need to bear the market risk of calculated pledge rewards before physical distribution occurs. The warning is similar to issues raised about delivery times this year by other pledged ETFs on the market.

What is unique about pledged income ETFs

As of July 24, 2026, Ethereum was the largest pledged asset in the fund, accounting for 11.75% of the positions, followed by Solana (3.17%) and Cardano (0.49%). This weight makes Ethereum's pledge economy the main driver of revenue on the NCIQ chain.

As of press time, Ethereum was trading at US$1,935.44, up 3.26% in 24 hours, although overall market sentiment remained cautious, with the Fear and Greed Index of 26, in the "Fear" range.

In the highly competitive cryptocurrency fund field, NCIQ stands out with its clear tiered pledge income policy. This move demonstrates continued innovation in fund design, echoes the way issuers incorporate pledges into their products, and reflects protocol-level pledge activity in the Ethereum ecosystem.

Hashdex's NCIQ page states that the product is not registered under the Investment Company Act of 1940. Investors need to consider this structural detail in conjunction with the promoter priority allocation mechanism when considering the income terms, as suggested in recent market and online reports.