Flow of Funds

How funds move through Nest vaults from minting to redemption.

This diagram outlines the full lifecycle—from user deposit to yield generation and redemption—showing every participant involved.

Lifecycle Overview

Example flow of funds from deposit to redemption, via vaults, custodians, and managers

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Step-by-Step Breakdown

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

Capital is deployed into tokenized assets (e.g., U.S. Treasuries, ETFs).

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

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

Tokenization partner returns dividends and yield from the asset manager's strategy back into the vault

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

Users can redeem vault tokens for principal + yield.

Related Pages

• Vault Overview
• Assets Used in Vaults
• Security & Compliance