PLAN OF DISTRIBUTION The Trust issues Shares in Baskets only to Authorized Participants in exchange for deposits of AVAX, on an ongoing continuous basis. The Trust does not issue fractions of a Basket. Although the Trust creates Baskets only upon the receipt of AVAX, at this time an Authorized Participant may choose to submit Cash Orders, pursuant to which the Authorized Participant will deposit cash into the Cash Account (and a Liquidity Provider will transfer to the Trust’s Vault Balance the corresponding AVAX) in connection with the creation and redemption of Baskets. Authorized Participants may also create Baskets pursuant to In-Kind Orders, pursuant to which an Authorized Participant or its AP Designee will deposit AVAX directly with the Trust or receive AVAX directly from the Trust. Authorized Participants may create a Basket pursuant to an In-Kind Order by depositing with the Trust the Basket Amount, which equals the amount of AVAX owned by the Trust at 4:00 p.m., New York time, on each trade date (after deducting the amount of AVAX representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust) divided by the number of Shares outstanding at such time and multiplying such quotient by 100. Cash Orders will be facilitated by the Transfer Agent and Grayscale Investments Sponsors, LLC, which will engage one or more eligible companies (each, a “Liquidity Provider”) to obtain or receive AVAX in connection with such orders. Authorized Participants may create a Basket pursuant to a Cash Order by delivering to the Cash Account (x) in the case of a Variable Fee Cash Order, the Basket NAV and any Variable Fee, or (y) in the case of an Actual Execution Cash Order, the Basket NAV, plus any Additional Creation Cash, less any Excess Creation Cash (such amount, as applicable, the “Required Creation Cash”), and the Liquidity Provider transferring the corresponding Basket Amount to the Trust’s Vault Balance. The Basket Amount equals the amount of AVAX owned by the Trust at 4:00 p.m., New York time, on each trade date (after deducting the amount of AVAX representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust) divided by the number of Shares outstanding at such time and multiplying such quotient by 10,000. The Basket NAV equals the U.S. dollar value of a Basket calculated by multiplying the Basket Amount by the Index Price as of the trade date. Shares will only be created and delivered to the Authorized Participant after the Trust is in simultaneous possession of (i) the Basket Amount and (ii) the Required Creation Cash. It is expected that Authorized Participants that create Shares will sell Shares to the public at varying prices to be determined by reference to, among other considerations, the price of AVAX and the trading price of the Shares on the NASDAQ at the time of each sale. There will not be an “initial” creation of Baskets upon the Trust’s listing on NASDAQ given that the Trust already has created Baskets of Shares that will continue to be outstanding as of such date. While the arbitrage mechanism is expected to keep the value of the Shares closely linked to the Index Price, due to price volatility and differentials, trading volume, and closings of Digital Asset Trading Platforms due to fraud, failure, security breaches or otherwise, there can be no assurance that the value of the Shares will reflect the value of the Trust’s AVAX, less the Trust’s expenses and other liabilities, and the Shares may trade at a substantial premium over, or a substantial discount to, the value of the Trust’s AVAX, less the Trust’s expenses and other liabilities. This risk may be exacerbated to the extent in-kind creations and redemptions of Shares become limited for any reason. See “Risk Factors—Risk Factors Related to the Trust and the Shares— The limited ability to facilitate in-kind creations and redemptions of Shares could have adverse consequences for the Trust.” Moreover, there may be variances in the prices of AVAX on the various Digital Asset Trading Platforms, including as a result of differences in fee structures or administrative procedures on different Digital Asset Trading Platforms, which could enhance or inhibit the arbitrage mechanism in a manner that is beyond our control. Because new Shares can be created and issued on an ongoing basis at any point during the life of the Trust, a “distribution,” as such term is used in the Securities Act, will be occurring. Authorized Participants, other broker- dealers and other persons are cautioned that some of their activities may result in their being deemed participants in a distribution in a manner which would render them statutory underwriters and subject them to the prospectus delivery and liability provisions of the Securities Act. For example, an Authorized Participant, other broker-dealer firm or its client will be deemed a statutory underwriter if it purchases a Basket from the Trust, breaks the Basket down into its constituent Shares and sells the Shares directly to its customers, or if it chooses to couple the creation of a new Basket with an active selling effort involving solicitation of secondary market demand for the Shares. A
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