Nex Value Flow

$NEX stakers receive real yield in the form of index tokens as a reward for their governance efforts. This is designed to reward users with diverse assets of their choice while also keeping TVL within Nex Protocol. The flywheel has been designed to best reward participants closely aligned with the goals of the ecosystem.

From the image (figma view only link) we can breakdown the user journey starting from the the mid left and moving to the right.

1. Mid Left - User selects an index product.

   • An index token is minted with a 0.3% fee.

2. Management Fees:

   • An annual management fee of 1–2.5% is applied, depending on the type of index product.

   • For "Build Your Own" index token products, a high-water mark performance fee may be included to reward fund managers for their efforts.

3. Fee Distribution:

   • Operational Costs: The primary goal of fee distribution is to cover operational costs. Due to the decentralized and self-custodial nature of the smart contract, these costs are minimal. They will never restrict users from accessing their capital and are designed to support the long-term health and growth of the ecosystem. Initially, a 37.50% revenue allocation is estimated to cover expenses, and this is set as a variable within the smart contract.

   • DAO Governance: The DAO will oversee budget allocations for expected expenses on a quarterly basis. Based on the most recent TVL (Total Value Locked), the revenue split is proposed, and expenses, along with the required revenue allocation, will be voted upon.

4. Remaining Revenue:

   • NEX and Index Token Stakers: The remaining revenue is shared between NEX and index token stakers in a 4:1 ratio.

     • 50% of Revenue: Distributed to $NEX stakers as dividends, primarily in nominated index tokens, (staked) $NEX tokens, or $USDC.

     • 12.50% of Revenue: Allocated to index token stakers to reward long-term holding and support stable protocol income. This value is intentionally kept low to avoid disincentivizing short-term index holders and to maintain competitive management fees.