which has led to increased transaction fees. Since January 1, 2023, Ether average daily transaction fees have ranged from $0.13 per transaction on December 27, 2025, to as high as $29.46 per transaction on March 3, 2024. As of December 31, 2025, Ether average daily transaction fees stood at $0.15 per transaction. Increased transaction fees and decreased settlement speeds could preclude certain uses for AVAX (e.g., micropayments), and could reduce demand for, and the price of, AVAX, which could adversely impact the value of the Shares. There is no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement of Avalanche Network transactions will be effective, or how long these mechanisms will take to become effective, which could adversely impact the value of the Shares. Digital asset networks are developed by a diverse set of contributors and the perception that certain high-profile contributors will no longer contribute to the network could have an adverse effect on the market price of the related digital asset. Digital asset networks and related protocols are often developed by a diverse set of contributors, but are also often developed by identifiable and high-profile contributors. The perception that certain high-profile contributors may no longer contribute to the applicable digital asset network or protocol may have an adverse effect on the market price of any related digital assets. For example, in June 2017, an unfounded rumor circulated that Ethereum protocol developer Vitalik Buterin had died. Following the rumor, the price of Ether decreased approximately 20% before recovering after Buterin himself dispelled the rumor. Some have speculated that the rumor led to the decrease in the price of Ether. In the event a high-profile contributor to the Avalanche Network is perceived as no longer contributing to the Avalanche Network due to death, retirement, withdrawal, incapacity, or otherwise, whether or not such perception is valid, it could negatively affect the price of AVAX, which could adversely impact the value of the Shares. Digital assets may have concentrated ownership and large sales or distributions by holders of such digital assets, or any ability to participate in or otherwise influence a digital asset’s underlying network, could have an adverse effect on the market price of such digital asset. As of the date of this filing, the largest 100 AVAX wallets held approximately 28% of the AVAX in circulation. Moreover, it is possible that other persons or entities control multiple wallets that collectively hold a significant amount of AVAX, even if they individually only hold a small amount, and it is possible that some of these wallets are controlled by the same person or entity. As a result of this concentration of ownership, large sales or distributions by such holders could have an adverse effect on the market price of AVAX. Staking may prove unattractive to validators, which could adversely affect the Avalanche Network. Staking on the Avalanche Network requires AVAX to be locked by the underlying blockchain network in “objects,” or data units on the Avalanche Network that hold assets and are managed by the protocol rather than the user. If the Avalanche Network source code or protocol were to fail to behave as expected, suffer cybersecurity attacks or hacks, experience security issues, or encounter other problems, such transferred (i.e., staked) AVAX may be irretrievably lost. In addition, the Avalanche Network’s underlying protocol dictates requirements for participation in validation activity, and may impose penalties, if the relevant activities are not performed correctly. In addition, the Avalanche Network dictate requirements for participation in validation activity, and may impose penalties, if the relevant activities are not performed correctly. The Avalanche Network’s penalties may be imposed if a validator commits malicious acts related to the validation of blocks with invalid transactions. Although the Avalanche Network does not implement slashing of staked principal, the protocol may impose penalties—such as loss of rewards or removal from the validator set—if a validator commits malicious acts or fails to perform required validation activities. Validators and delegators may stake AVAX for a minimum of two weeks and for a maximum of one year during which the staked AVAX is locked. AVAX is inaccessible while it is staked. The Avalanche Network requires the payment of gas fees in AVAX, and such fees can become significant as the amount and complexity of the transaction grows, depending on the degree of network congestion and the price of AVAX. Any cybersecurity attacks, security issues, hacks, penalties, or other problems could damage validators’ willingness to participate in validation, discourage existing and future validators from serving as such, and adversely
27
Made with FlippingBook - professional solution for displaying marketing and sales documents online