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. 40% of it is paid to holders by balance twice a day, in NVDA, with nothing to claim. 60% buys stock into a treasury, and that stock works: covered calls on weekdays, lending supply on weekends. What the stock earns is paid out the same way, in stock.

• 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.
• Every payout is what a counterparty actually paid: a trader's tax, a call buyer's premium, a borrower's fee. No counterparty, no payout.

:::note Two charges, told apart

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%.

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Where the tax comes from

Both charges settle in NVDA, on buys and on sells, before and after graduation. Nothing is minted to fund the payouts. No trades, no tax — the figures on the $HEDGE page are what was actually paid.

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 distributor pays 40% to holders.	Pays each round's NVDA to holders by balance, at a published snapshot block; the keeper pushes to every address above the dust floor, and a claim path stays open for anyone who prefers it. Small holdings at the snapshot do not count; payouts under the floor roll into the next round. Pools and treasury addresses are excluded.
04	The treasury holds the other 60% as stock and works it.	Lending supply on weekends through StockLend; covered-call inventory on weekdays through CoveredCall once it has external buyers. Fees and premiums flow back through the same distributor.

Which hops are on chain today, and the addresses behind each, are shown live on hedgehood.app/hedge — they change as contracts are deployed, and this page will not notice.

What the treasury does

The treasury does not sell its stock and does not short it. 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, converted to stock, and paid out. 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 CoveredCall contract is deployed and paused; this leg turns on when an external buyer fills at a price the treasury set, not before.

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 and pays out instead of buying back.

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.

No counterparty, no payout

The options market is deployed and paused; until an external buyer fills, that leg pays nothing. The lending markets have had a handful of loans; on a quiet weekend they pay nothing. The tax pays only while people trade the token.

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.

:::info One sentence

Traders pay a tax; 40% is paid to holders in stock twice a day, 60% becomes treasury stock that lends on weekends and writes calls on weekdays, and what it earns is paid out the same way.

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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
Distributor	pays holders, funded only by the Safe
StockLend	the treasury's own shares; withdrawable when idle
CoveredCall	deployed, paused; the Safe unpauses

Addresses are read from chain and listed on hedgehood.app/hedge. See also the glossary.