made, and the Trust would not be required to further compensate the Liquidity Provider (or be entitled to compensation from the Liquidity Provider) if the actual date of AVAX delivery differed from the estimated delivery date. It is also possible that, in connection with future redemption orders, the Sponsor may make arrangements for the Trust to obtain liquid AVAX from the Custodian or another institutional liquidity provider in exchange for the Trust’s present or future delivery of a similar number of AVAX tokens, although the details of any such future arrangement are not presently known. These and other liquidity risk policies and procedures are intended to be consistent with NASDAQ’s generic listing standards. However, there can be no assurance that such arrangements would be available as intended or provide sufficient liquidity to satisfy redemption requests. Under the Staking Arrangements, any Staking Consideration earned accrues in accordance with the Avalanche Network’s rewards distribution mechanism to the Trust’s wallets administered by the Custodian. Periodically, the Trust will either (i) distribute AVAX received as Staking Consideration to the Trust’s beneficiaries (likely using a liquidating agent), (ii) sell that AVAX for cash and distribute the proceeds to the Trust’s beneficiaries, (iii) pay a portion of the Staking Consideration to the Sponsor (the “Sponsor’s Staking Fee”) as consideration for its facilitation of the Staking Arrangements or (iv) a combination of the foregoing, in the Sponsor’s sole discretion. The Sponsor has implemented a staking policy with respect to the Trust, which describes the frequency of, and conditions under which the Trust will make such distributions, if any, to the Trust’s beneficiaries. The Sponsor will make such staking policy available to shareholders on the Sponsor’s website. The Trust (through the Custodian) will maintain control and remain the record and beneficial owner of the staked tokens at all times, and the tokens will remain associated with the Trust’s wallet. As of the date of this prospectus and pursuant to the Staking Arrangements, the Sponsor anticipates that that the Custodian and the Staking Provider would be entitled to receive a portion of the gross Native Staking Consideration generated under the Staking Arrangements, reflecting the Custodian’s fee and the Staking Provider’s share of such Staking Consideration, with the remainder received by the Trust. The allocation of gross Native Staking Consideration between the Custodian and the Staking Provider shall reflect an arm’s length allocation that is independent of the expenses of both the Staking Provider and Custodian, and may be stated as a percentage of the gross Native Staking Consideration. In addition, pursuant to the Trust Agreement and as consideration for the Sponsor’s facilitation of Staking, the Sponsor is permitted to receive a fee equal to a portion of the Native Staking Consideration, which accrues daily in U.S. dollars in an amount calculated as a per annum percentage of any Native Staking Consideration received by the Trust, as may be directed by the Sponsor in its sole discretion. The Sponsor’s Staking Fee would be payable to the Sponsor daily in arrears. As of the date hereof, the Sponsor’s Staking Fee, the Custodian’s fee and the Staking Provider’s share of such Staking Consideration comprises an aggregate of 23% of the gross Staking Consideration generated under the Staking Arrangements. The Trust will receive and retain the remainder of such gross Staking Consideration. The Staking Arrangements are generally on market terms, consistent with those typically offered by leading digital asset firms that offer staking functionality. However, the Trust has and will continue to negotiate certain provisions as necessary or helpful to preserve the Trust’s status as a grantor trust and the security of the Trust’s AVAX, as well as to address governmental, policy or regulatory concerns. For example, unlike certain digital asset firms that offer staking functionality through which one’s AVAX is pooled with that of others (including, potentially, the Staking Provider in its general staking offerings), the Staking Arrangements will not permit the Trust’s AVAX to be pooled with that of other AVAX holders, including the Staking Provider or others that stake to the Staking Provider, as described above. In addition, the portion of staking rewards to be received by the Staking Provider is expected to be an agreed percentage of block rewards and transaction fees generated by the validating activities, unlike certain alternative staking arrangements under which a staking provider may be compensated as an agreed percentage of AVAX staked. The Trust will have no right to direct the Staking Provider in the conduct of validation activities, except to stake AVAX pursuant to instructions delivered to the Custodian, and will not bear any expenses incurred by the Staking Provider in conducting those activities. In particular, the amount of any Staking Consideration that the Trust receives will not be determined with reference to any expenses incurred by the Custodian or the Staking Provider. The Staking Arrangements will not include any obligation of the Trust to continue staking its AVAX, or for the Custodian or the Staking Provider to continue the Staking Arrangements, other than to the extent the Trust’s AVAX cannot immediately be un-staked due to requirements of the AVAX protocol. There may also be instances where the Staking Provider may pause or terminate its validation activities due to its own independent assessment of the
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