The rewards for staking NGM tokens come from two sources: transaction fees and a markup on the currency-backed stablecoins.
Transaction fees can be paid with NGM or in any of the currency-backed stablecoins and we expect trading activities on the DEX to be the primary source of these.
The markup consists of an annual 1% inflation on each currency-backed token. The markup is applied continuously and distributed pro-rata to staked NGM token holders.
In short, the rewards that are distributed to staked NGM tokens tie directly to the amount of issued currency-backed stablecoins.
The model eliminates the reliance on transaction costs to sustain operations. This aligns with the design goals of Cosmos Hub and the Internet of Blockchains, as the currency-backed stablecoins can move freely across zones.