CoinShares and FTX have joined forces to launch a physically-backed Solana (SOL) exchange-traded product (ETP).
The ETP is the first from FTX’s new institutional unit, FTX Access, which launched earlier this month offering advisory, trade execution, and analytical tools. The tokens underlying the exchange-traded product will be staked and earnings distributed amongst contributors.
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FTX will seed one million Solana tokens valued at approximately $91 million in partnership with Coinshares, said CEO Sam Bankman-Fried.
Europe’s exchange-traded product market is one of the most mature globally, providing the opportunity to create exposure to crypto investing without earning coins.
Staking is a process where traders lock up a portion of their tokens to assist a provider in validating blockchain transactions and receiving payouts in return.
FTX and CoinShares will receive additional revenue
This increasingly popular strategy promises yields extending into three digits. The physically-backed ETP will provide Coinshares and FTX with additional revenue, which providers will share with investors by reducing the product’s management fee to 0% per annum and an extra staking reward of 3%.
The product will be listed on Germany’s Xetra exchange, alongside Polkadot, Cardano, and Tezos ETPs from Coinshares.
21Shares launched a Solana ETP last year, which generated a 38% loss by Feb 5 following a sharp decrease in crypto prices.
Bankman-Fried’s trading firm Alameda Research has invested $314.2 million in Solana Labs, and Bankman-Fried is a well-known supporter of Solana. “We only want to launch products that are genuinely innovative and add value to our clients,” he said.
Crypto’s volatility can result in batches of cash-outs, whose ETPs are unlike those tracking traditional equities. Coinshares’ head of product said an internal staking agent lends coins to satisfy cash-outs, helping the company avoid liquidity issues.
Both FTX and Coinshares hope the joint ETP will attract greater institutional interest in the light of being underpinned by comprehensive regulation.
This would set it apart from Coinshares’ earlier products’ retail client base. The lag in institutional interest has been caused by institutions getting up to speed with the investment potential of Bitcoin and Ethereum before moving onto smaller projects like Solana.
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