VanEck, an asset management company, has announced that its Solana Exchange Traded Notes (ETN), offered in Europe, now include staking as part of their structure.
The staking mechanism employed is non-custodial, meaning that the custodian retains full control over the staked assets, and there is no risk of lending. This development allows investors to participate in Solana’s staking rewards through the ETN without direct management of the assets.
🚨VanEck EU Enables Staking for the $VSOL Solana ETP (AUM= $73M) 🚨
> Rewards Accrue & Re-Invested Daily
> Staking Rewards Included in End-of-day NAV Daily.
> VanEck to Manage Staking Exposure to Ensure Daily Liquidity@vaneck_eu
— matthew sigel, recovering CFA (@matthew_sigel) October 21, 2024
Non-Custodial Staking Model
VanEck’s non-custodial staking approach ensures that the SOL (Solana tokens) used for staking are always controlled by the custodian holding the ETN’s assets. The method minimizes risks typically associated with staking, such as counterparty risks that might arise if a third party gains control over the staked assets.
Investors who hold VanEck’s Solana ETN are automatically enrolled in staking, and any rewards generated will be included in the ETN’s token equity. This means that investors, regardless of when they purchased the ETN, will receive staking rewards proportionally. However, these rewards will be subject to a 25% fee before distribution.
Staking Process and Validator Delegation
The Solana tokens held within the ETN are delegated to validator nodes as part of the staking process. While the validator nodes are operated by external staking service providers, the underlying SOL tokens remain fully controlled by the custodian. This setup ensures that the tokens are not lent out or exposed to additional risks beyond the staking process itself.
ETNs and Their Function
Exchange Traded Notes (ETNs) are financial products typically issued by institutions and designed to provide returns based on the performance of a particular asset. In the case of the VanEck Solana ETN, the performance is tied to the value of Solana, with staking rewards adding an additional potential return. ETNs, however, do not involve direct ownership of the underlying asset by investors but instead track the asset’s performance.
Investor Considerations
- Automatic Participation: Investors in VanEck’s Solana ETN are automatically included in staking activities, with no need for direct action. Rewards, if generated, are distributed proportionally across all holders.
- Control and Security: The non-custodial structure of the staking process ensures that the SOL tokens remain under the control of the custodian at all times, reducing the risks typically associated with third-party involvement.
- Staking Fees: Investors should be aware that staking rewards are subject to a 25% fee, which will be deducted before the rewards are distributed.
