Possible illiquid markets may exacerbate losses or increase the variability between the Trust’s NAV and its market price. AVAX is a novel asset with a limited trading history. Therefore, the markets for AVAX may be less liquid and more volatile than other markets for more established products, such as futures contracts for traditional physical commodities. It may be difficult to execute an AVAX trade at a specific price when there is a relatively small volume of buy and sell orders in the AVAX market. A market disruption can also make it more difficult to liquidate a position or find a suitable counterparty at a reasonable cost. Market illiquidity may cause losses for the Trust. The large size of the positions that the Trust may acquire could increase the risk of illiquidity, by both making the positions more difficult to liquidate and increasing the losses incurred while trying to do so, should the Trust need to liquidate its AVAX. Any type of disruption or illiquidity will potentially be exacerbated due to the fact that the Trust will only invest in AVAX, which is highly concentrated. As of the date of this filing, the total market value of the AVAX circulating supply is approximately $4.0 billion, comprised of approximately 431.8 million AVAX. On average over the last 30 days, over any given 24-hour period, the reported global AVAX trading volume was approximately $119.2 million. The Index has a limited history and a failure of the Index Price could adversely affect the value of the Shares. The Index has a limited history and the Index Price is a composite reference rate calculated using trading price data from various Digital Asset Trading Platforms chosen by the Index Provider. The Index was launched on January 11, 2025. From the commencement of the Trust’s operations until September 30, 2025, the Index was the CoinDesk AVAX Reference Rate Price. The Sponsor determined that the Index is appropriate for the Trust because the Index Price is able to reflect accurate point-in-time pricing throughout the trading session. The Sponsor determined that the liquidity of the AVAX Digital Asset Market could support such pricing, and the Index change aligns with market practice of calculating NAV of ETPs at 4:00 PM using the real-time price. The Digital Asset Trading Platforms chosen by the Index Provider have also changed over time. The Index Provider may remove or add Digital Asset Trading Platforms to the Index in the future at its discretion. For more information on the inclusion criteria for Digital Asset Trading Platforms in the Index, see “Business—Overview of the Avalanche Industry and Market—The Index and the Index Price.” Although the Index is designed to accurately capture the market price of AVAX, third parties may be able to purchase and sell AVAX on public or private markets not included among the constituent Digital Asset Trading Platforms of the Index, and such transactions may take place at prices materially higher or lower than the Index Price. 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. For example, based on data provided by the Index Provider, on any given day during the twelve months ended December 31, 2025, the maximum differential between the 4:00 p.m., New York time spot price of any single Digital Asset Trading Platform included in the Index and the Index Price was 2.42% and the average of the maximum differentials of the 4:00 p.m., New York time, spot price of each Digital Asset Trading Platform included in the Index and the Index Price was 2.17%. During this same period, the average differential between the 4:00 p.m., New York time, spot prices of all the Digital Asset Trading Platforms included in the Index and the Index Price was 0.01%. All Digital Asset Trading Platforms that were included in the Index throughout the period were considered in this analysis. To the extent such prices differ materially from the Index Price, investors may lose confidence in the Shares’ ability to track the market price of AVAX, which could adversely affect the value of the Shares. A decline in the adoption of AVAX or the Avalanche Network could negatively impact the Trust. The Sponsor will not have any strategy relating to the development of AVAX and the Avalanche Network. However, a lack of expansion in usage of AVAX and the Avalanche Network could adversely affect an investment in Shares. The further development and acceptance of the Avalanche Network, which is part of a new and rapidly changing industry, is subject to a variety of factors that are difficult to evaluate. The slowing, stopping or reversing of the development or acceptance or usage of the Avalanche Network may adversely affect the price of AVAX and
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