NAV, decay & funding

A leveraged tracker is not a stock at 5×. Three forces separate it from the naive multiple, and all three are worth understanding before you rely on one as a floor.

NAV

A tracker's NAV is its backing — the equity of its perpetual position plus the USDT0 sitting in its vault — divided by its supply. It is posted on chain and readable by anyone, and mint and redeem are open at it — which is the arbitrage that keeps the traded price and the NAV together.

Everything the platform quotes in dollars for a bonded coin passes through NAV. It is the one number that turns "so many trackers" into "so many dollars".

The markets behind the trackers trade around the clock on the venue, so NAV keeps moving on nights and weekends, and the position can be resized at any hour. Outside the underlying market's own hours the venue prices it from a median of other round-the-clock venues, so the price can still move sharply when the underlying market reopens.

Volatility decay

A constant-leverage tracker rebalances to keep its multiple. That is what makes the multiple hold day to day, and it is also what makes it lose ground on a round trip.

Take an underlying that falls 10% and then rises back, against a 5× tracker:

underlying:   100 → 90 → 100          net  0%
5× tracker:   100 → 50 → 77.8         net −22%

The stock is unchanged. The tracker is down 22%. Nothing malfunctioned — this is the arithmetic of constant leverage, and it applies to every leveraged product that has ever existed. A lower multiple decays less; at 1× there is no rebalancing and no decay.

A tracker is not a long-term store of value. The more the underlying chops, the more it costs. If you are holding a bonded coin because you like where the stock is going, that thesis has a clock on it.

Funding and fees

The position lives on Nado, and the venue charges it two ways. Both are paid out of the tracker's own account — so they show up as drag on the NAV, not as a charge on your swap.

• Funding — settled every hour, on the hour, between longs and shorts on the same market. On stock, index and commodity perpetuals the rate follows the gap between the perpetual's order-book price and the spot index: when the perpetual trades above the index, longs pay shorts; below it, shorts pay longs. It is capped at ±2% a day.
• Trading and withdrawal fees — the keeper only sends orders that fill immediately, which pay Nado's taker fee of 0.035% of notional (3.5 bps at the entry fee tier). It trades whenever backing arrives or leaves and whenever leverage drifts out of band. Moving USDT0 back from the account to the vault costs a flat 1 USDT0 per withdrawal; deposits are free.

At 5×, all of it is levered: a rate that looks negligible on a spot position is five times that against the margin behind a tracker.

What this means for a coin's floor

The backing behind a bonded coin is a leveraged position, and it moves like one. It can be worth much more than the dollars that went in, and it can be worth much less. It is not a stablecoin reserve and nothing here pretends otherwise.

What it is, is real, on a venue you can query, at a size you can read, held in the tracker's own account. See the hedge book.