How $HEDGE works
Where the tax comes from, who it is paid to, what the treasury does with its share, and every way it can still lose you money.
Stocks that pay you twice a day
Traders pay a 3.33% tax on every $HEDGE trade, settled in NVDA. 20% of it is paid to holders by balance twice a day, in NVDA, straight to the wallet. 80% goes to the treasury as stock, and that stock works as RWAFi: it is lent through StockLend and runs options strategies that collect premium, and the income comes back to holders by buying back $HEDGE.
- Buying is paying a tax and taking a place in the payout list; it is not buying a claim on the treasury's assets.
- The treasury is long the stock. It is not hedged. It rises and falls with the stock it holds.
- Payouts come from the trading tax; buybacks come from lending fees and option premium.
- Two optional stakes add to this, and they stack: a hedgehog boosts your payouts, and staked $HEDGE earns a share of Stock Yield's fee in USDG. See two stakes.
Pons charges a 1% standard fee on every launch, split between Pons, the creator and Pons' buyback. On top of it the creator sets a tax at launch, capped at 10% and frozen forever. $HEDGE's tax is 3.33%.
Where the tax comes from
Both charges settle in NVDA, on buys and on sells, before and after graduation. Every payout is funded by this tax.
Pons' sniper tax on the opening blocks is not burned; it joins the launch's fees and is distributed the same way, so the opening rush is paid out too.
Who it is paid to
Four hops.
| # | Hop | Who does it |
|---|---|---|
| 01 | Pons escrow credits the tax to one recipient. | Pull-based; it only arrives after a sweep (Pons' operator, or the recipient itself while the launch is on the curve). Unswept tax shows on the curve as quoteFeeBalance. |
| 02 | The Safe (2 of 3) is that recipient. | Recorded in the factory's launch record as creatorFeeRecipient; the Safe claims with claimToken(NVDA). Keys are held by people; the keeper never holds one. FeeSink, the contract built for this seat, is held in reserve. |
| 03 | The PayoutDistributor pays 20% to holders. | A keeper opens each round at a snapshot block and commits the hash of the full payout list on chain before any NVDA moves, then pays every wallet from the Safe's allowance. Two rounds a day, 8 to 16 hours apart, at random times. Wallets holding $50 or more at the snapshot are paid; amounts under the floor roll into the next round. Pools and treasury addresses are excluded, and the Safe can pause it. |
| 04 | The treasury holds the other 80% as stock and works it. | Lent through StockLend and run in options strategies that collect premium; lending fees and premium buy back $HEDGE for holders. |
Every hop is a contract on chain; the addresses are in the reference below.
Hedgefun's protocol income buys $HEDGE. The protocol receives 30% of every Hedgefun tax, in stock, and 30% of that income goes to buying $HEDGE back: 9% of every collected tax. The Safe makes the purchases periodically, by hand. It is a commitment of the Safe, not an on-chain mechanism, and it is separate from the payouts above. The launch fee is not part of it. See the protocol's share.
Two stakes, and they stack
There are two things you can stake, on two pages, for two different incomes. They are separate contracts; do either, both or neither.
| Stake a hedgehog | Stake $HEDGE | |
|---|---|---|
| Where | hedgehood.io/mine | hedgehood.io/hedge/stake |
| What you stake | a Hedgehog Miner NFT, for 7, 14 or 30 days | any amount of $HEDGE |
| What it earns | a bigger share of the holder payouts above: its tier multiplies up to 250,000 of your $HEDGE | 10% of the Stock Yield funds' protocol fee, split by stake |
| Paid from | the $HEDGE trading tax (the holders' 20%) | the fee the Stock Yield funds take on option premium |
| Paid in | NVDA, twice a day, with the holder payouts | USDG; a new round every week, claimed on the stake page; nothing expires |
| Getting out | the NFT cannot move until its term ends; then unstake or restake | 7-day unstake cooldown |
| Also | 10,000 $HEDGE staked opens deposits into the NVDA Printer (v1) |
They stack. Staked $HEDGE still counts as your balance in every holder round (stake in its cooldown too), so a wallet that stakes both is paid boosted holder payouts in NVDA and its share of the fee in USDG.
The hedgehog boost. In each holder round a wallet's weight is
weight = balance + min(balance, 250,000 HEDGE) × (multiplier − 1)
with multipliers Common 1.2×, Uncommon 1.4×, Rare 1.6× and Legendary 2.0×. One hedgehog per wallet counts, the highest tier it has staked, and only while its term runs. The boost re-splits the same holder pool rather than adding to it, and it multiplies $HEDGE, so a hedgehog in a wallet with no $HEDGE earns nothing: keep at least $50 of $HEDGE beside it.
The fee share. Every week the keeper adds 10% of the fee the nine Stock Yield funds (the NVDA Printer and the eight v2 funds) have credited, splits it by staked $HEDGE at a snapshot block, and publishes a cumulative Merkle root to the StakerMerkleDistributor. You claim the difference in USDG whenever it is worth the gas. $HEDGE in its unstake cooldown earns no fee share.
An example. A wallet with 300,000 $HEDGE staked and a Legendary hedgehog staked weighs 300,000 + 250,000 × 1.0 = 550,000 in each holder round, and earns 300,000 / (all staked $HEDGE) of each week's fee share.
What the treasury does
The treasury holds its stock long. It holds NVDA first, and later any stock that has a lending or options market here. One share is only ever in one contract at a time; the two jobs are separated by the calendar, not by splitting the inventory.
Mon 00:00Z reopen + 6h -- weekend loans mature, stock returns to the treasury
Mon-Fri covered calls -- written with expiry before Friday's close (v1: <= 7 days)
Fri 20:00 ET close -- stock supplied to StockLend for the closed session
Sat-Sun lending -- borrowers short the weekend premium, fee streams by the hour
Lending
Supplying stock to a StockLend market keeps the share count: the treasury holds shares of the market, borrowers post collateral well above the loan and must return the stock by a date the trading calendar sets. Lending fees are paid in USDG and, like call premium, buy back $HEDGE. The lending document covers the mechanics and where the protection stops.
Covered calls
A covered call locks stock as collateral and sells a buyer the right to take it at a strike before expiry, for a premium paid up front. If the stock finishes above the strike the treasury delivers it at the strike and rebuys later; the upside above the strike is what was sold. The premium buys back $HEDGE. The first CoveredCall contract was retired on 17 September 2026; calls are now listed as European series on the options order book, where buyers pay the premium.
The weekend
From Friday's close to Sunday's reopen the Chainlink stock feed is frozen while the token keeps trading, so the pool can sit at a premium for two days with nothing to arbitrage it. That premium is what borrowers pay the treasury to sell into. The treasury's own stock never leaves it; only the borrower's collateral is at risk.
What is measured, and what is not promised
Measured
The weekend premium ledger samples every tracked stock's pool price against its frozen oracle through each closed session. On the busiest weekend so far, MSTR went from 127.5 to 345 and back by Monday; on a quiet one nothing exceeded 4.2%. Borrowers show up in the first kind of weekend and not the second, and the treasury's lending income follows them.
Not promised
A yield. The app shows what was paid in the last 24 hours and since launch, never an annualised projection, because the number follows trading volume and counterparties and both can go to zero.
The earlier design
Until 2026-09-11 this document described a hedged treasury: tax split into perp margin and LP inventory, shorted for exactly what it held, with yield returned by buyback. The identity that sized that hedge and its liquidation and key-leak bounds were proved and are kept in the paper linked below. That design is not what launched; the treasury described here takes the stock's direction, pays holders from the tax, and uses what its stock earns to buy back $HEDGE.
Hedged meme treasury (PDF, 14pp)
What can go wrong
The treasury is long the stock
Whatever the treasury holds, holders are exposed to. A 30% drop in the stock is a 30% drop in the treasury; a covered call written before a rally caps what the treasury keeps at the strike and leaves it with fewer shares after it rebuys. Payouts are cash flow, not a hedge.
Securities, jurisdictions, pauses
Stock tokens are Jersey-issued debt securities and Robinhood can pause their transfers; payouts are made in those tokens. Pons does not offer stock-quoted markets to traders in the United States. A token that pays out stock has not been reviewed by counsel; until it has, treat the legal status as unknown.
What HEDGE is not
HEDGE is a memecoin. It can go to zero. The lending and options contracts are reviewed but not audited. Pons v2's audits are not closed.
Traders pay a tax; 20% is paid to holders in stock twice a day, 80% becomes treasury stock that is lent and runs options strategies, and that income buys back $HEDGE.
Reference
| Role | Who can move value out |
|---|---|
| Safe | 2-of-3 human signers |
| FeeSink | held in reserve: no owner, the only exit is the Safe; not the recipient today |
| PayoutDistributor | keeper-run; pays holders from the Safe's allowance, and the Safe can pause it |
| StockLend | the treasury's own shares; withdrawable when idle |
| CoveredCall | v1, retired 2026-09-17; calls now go through the options order book |
| Contract | Address |
|---|---|
| Safe (2 of 3) | 0xB5C9e27F50599687eD141ABe337414B79061489b |
| PayoutDistributor | 0x53F1364f347b12997152650b6c1dEf7a3F9F854a |
| Pons fee escrow | 0xd3AFEB2a57f70eF218Aa82451c51B2fb0416Ac9e |
| FeeSink (reserve) | 0x387EA80eB69BeDde1119c9ff190b310f5971ee59 |
| $HEDGE | 0x3f9108a3beca998c14c6dda822a7e8eaeb88e20d |
| $HEDGE staking (HedgeStakingGate) | 0x48ae41142bb0Ddd18DC49BD659b55207FAcE64d8 |
| StakerMerkleDistributor (stakers' USDG) | 0xcDCEcba5bfFB448F7255653b36E22b3725a9eA16 |
| Hedgehog Miner | 0x7821B227d2c578f364a74CF584E4CF80288D97Cb |
| Hedgehog Miner (genesis) | 0xdEac6531c808Ca50C72EC7B56493FAa0BebF15C6 |
| NVDA | 0xd0601CE157Db5bdC3162BbaC2a2C8aF5320D9EEC |
See also the glossary.