SECURITY & COMPLIANCE
Flow of Funds
Flow of Funds
Section titled “Flow of Funds”This diagram outlines the full lifecycle—from user deposit to yield generation and redemption—showing every participant involved.
Lifecycle Overview
Section titled “Lifecycle Overview”.png)
Example flow of funds from deposit to redemption, via vaults, custodians, and managers
Step-by-Step Breakdown
Section titled “Step-by-Step Breakdown”1. Vault mints tokens in exchange for stablecoins
Section titled “1. Vault mints tokens in exchange for stablecoins”Users receive ERC-20 vault tokens that represent their position and accrue value over time.
2. Vault allocates to assets
Section titled “2. Vault allocates to assets”Capital is deployed into tokenized assets (e.g., U.S. Treasuries, ETFs).
3. Custodian secures funds
Section titled “3. Custodian secures funds”Both assets and cash are held by third-party custodians (e.g., BNY Mellon), never Nest, to generate returns.
4. Manager (e.g., Simplify) deploys capital
Section titled “4. Manager (e.g., Simplify) deploys capital”Asset managers allocate funds to yield-generating strategies like:
- Short-term U.S. Treasuries
- ETFs, public debt, commodities
5. Tokenization partner returns yield from asset manager
Section titled “5. Tokenization partner returns yield from asset manager”Tokenization partner returns dividends and yield from the asset manager’s strategy back into the vault
6. Vault token goes up in value
Section titled “6. Vault token goes up in value”As yield is distributed back to the vault, the value of vault tokens increases proportionally.
7. User redeems at any time
Section titled “7. User redeems at any time”Users can redeem vault tokens for principal + yield.