Lightspeed Newsletter: North America's first solana ETP pitch is here

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Today’s a big day for regulated investment vehicle enjoyers, as we got news of a SOL ETP filing yesterday afternoon.

It’s also a big day for long daytime enjoyers, as yesterday was the longest day of 2024. I fall more into the latter camp personally. But regardless:

3iQ takes the Solana fund plunge

The Canadian crypto-focused fund manager 3iQ announced yesterday afternoon that it had filed a prospectus to offer a solana exchange-traded product (ETP).

The move is notable not so much for 3iQ’s size but for the historical context: The firm listed bitcoin and ether funds before either asset had a regulated futures market in the US. Many view a futures ETF as a key milestone for any potential crypto spot ETF.

The solana ETP, which would trade as QSOL on the Toronto Stock Exchange, would be a closed-end fund, meaning that a limited number of shares would be created through an initial public offering (IPO) which could then be bought and sold on the stock exchange. This is in contrast to BlackRock’s IBIT bitcoin ETF, for instance, which can create and buy back shares based on market fluctuations.

The fund will charge a 1.5% management fee, according to a copy of the prospectus we obtained, which puts it below the 2.5% charged by the Grayscale Solana Trust — another solana-focused security in North America.

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What I found most interesting from the filing is that some of the fund’s SOL will be staked via Coinbase Custody, and 25% of the staking rewards will go to 3iQ as a “staking fee.” The other 75% goes to the fund — but that 25% is still a pretty big slice for the firm.

3iQ Digital Assets president Christopher Matta told me the hefty staking fee is justified by the value offered by a regulated solana vehicle having exposure to both price and staking rewards. Matta added that as more of these funds come to market, “fees, of course, will come down across the board.”

If you’ll remember, the SEC’s approval of US spot ether ETFs last month hinged on staking being stripped from the filings. 3iQ currently offers an ether staking ETF on the Toronto Stock Exchange.

Down the road, solana ETF hopefuls should watch for a futures ETF to go live on the Chicago Mercantile Exchange (CME), a step both bitcoin and ether both went through before their eventual approvals.

“I think a lot of the regulatory uncertainty in the US has probably been one of the reasons why it hasn’t happened yet,” Matta said of solana futures ETFs. Last year, the SEC indicated solana could be classified as a security in lawsuits against Binance and Coinbase. Any update to that stance would doubtless have a large impact on the potential for solana ETFs in the US.

For now at least, Canadian regulators will be giving solana a look-over.

Matta said the path from the prospectus to a decision from regulators will likely take “a few months.”

— Jack Kubinec

Zero In

Solana set a record for weekly unique active addresses on the network last week, according to Blockworks Research.

The darker purple represents existing addresses, while the lighter purple are new addresses. You can see a significant rise in new addresses over the past few months — perhaps driven by the growing interest in memecoin trading.

But lest I get flooded with angry emails, let me add one quick caveat: unique addresses are not the same thing as unique users. The chart shows roughly 4.7 million unique addresses transacted on Solana last week, but the number of unique users was certainly smaller, as some individuals will make use of multiple addresses.

— Jack Kubinec

The Pulse

ICYMI: Stories you may have missed from Solana land this week:

The Solana Incubator Demo Day is set for June 26. Featured projects will include Armada, Espresso Cash, Juicer, Sanctum, Shaga, and Zeebit.
Pyth Network deployed its pull oracle on Solana, bringing increased reliability, higher frequencies, more feeds, historical data, and enhanced security to Solana DeFi.
The first footage of the MagicBlock Engine, designed for fully on-chain Solana games with zero lag and high performance, was showcased at a16z crypto demo day.
Solana’s summer kickoff events are happening worldwide, with major meetups in Lisbon, Berlin, Zurich, Amsterdam, Chicago, San Francisco, and many more.
Solana layer-2 network Sonic raised $12 million in a Series A funding round led by Bitkraft Ventures, with a valuation of $100 million.
TipLink wallet has arrived on Truffle. Web2 users can now mint from Truffle Drop using just a Google account, eliminating the hassle of extensions and seed phrases.
An MEV sandwich bot named “arsc” has made around $30 million from Solana users over the past two months through MEV attacks. The bot’s activities and profits are largely hidden, with significant funds in cold storage and active DeFi wallets.