Crypto investment firm CoinShares has launched a new ETP in Europe providing zero-fee, staked exposure to SOL, the native token underpinning the Solana blockchain.
Jean-Marie Mognetti, CEO at CoinShares.
The CoinShares FTX Physical Staked Solana ETP (SLNC GY) has been listed on Deutsche Börse Xetra in euros.
Solana, which officially launched in March 2020, is a highly functional open-source project providing decentralized finance solutions.
Solana’s main innovation is its proof-of-history consensus which leads to incredibly short validation times of less than half a second (compared to 15 seconds for Ethereum and around 10 minutes for Bitcoin) and allows the blockchain to handle thousands of transactions per second.
The protocol is designed in such a way as to have low transaction costs while still guaranteeing speed and scalability.
Due to its lightning-fast validation times, Solana has attracted a lot of institutional interest, and SOL is currently the eighth-largest cryptocurrency globally with a total market capitalization of $35.5 billion.
The ETP offers institutional investors easy access to SOL through a liquid, regulated vehicle without the technical challenges of setting up private keys or crypto wallets.
It uses full direct, so-called ‘physical’ replication with each ETP share being 100% collateralized by a corresponding investment in SOL. Physical (in a digital sense) SOL tokens are stored using institutional-grade custody solutions provided by Komainu.
The ETP comes with a management fee of 0.00%, while investors in the ETP will also earn a 3% return per annum attributable to ‘staking’ income generated by the underlying SOL tokens.
Staking is a way of earning rewards for holding certain cryptocurrencies that work on a proof-of-stake consensus mechanism. Proof-of-stake mechanisms put their underlying cryptocurrency to work in verifying and securing transactions on the blockchain. Investors who choose to take part in this process ‘stake’ their cryptocurrency holdings and earn rewards for doing so.
CoinShares has partnered with regulated cryptocurrency exchange FTX which facilitates the smooth and secure staking of underlying SOL tokens.
Staked coins do not move from the secure custodian where they are stored, and the ETP remains 100% physically backed at all times.
The launch brings the total number of CoinShares’ directly backed crypto ETPs to eight. Four of the products, which invest in Bitcoin, Ethereum, Litecoin, and XRP, do not pursue staking returns. In addition to the Solana ETP, the remaining three products offer zero-fee, staked access to Polkadot, Tezos, and Cardano.
Jean-Marie Mognetti, CEO at CoinShares, said: “At CoinShares, we have an aggressive strategy in place to drive the overall growth of the company as well as the digital asset ecosystem as a whole. An integral piece of our growth process is establishing strategic partnerships with top-tier firms that allow us to provide our investors with additional value and increase our institutional offering, giving our clients additional market penetration. A shared goal of FTX and CoinShares is to offer institutions means of access to cryptocurrency markets and, through this partnership, both companies will be able to leverage their industry-leading technology to bring innovative products to market.”