Competition from the emergence or growth of other digital assets could have a negative impact on the price of AVAX and adversely affect the value of the Shares. As of December 31, 2025, AVAX was the twenty-second largest digital asset by market capitalization, as tracked by CoinMarketCap.com. As of December 31, 2025, the digital assets tracked by CoinMarketCap.com had a total market capitalization of approximately $2.7 trillion (including the approximately $5.3 billion market cap of AVAX), as calculated using market prices and total available supply of each digital asset, excluding stablecoins and tokens pegged to other assets. AVAX faces competition from a wide range of digital assets, including Bitcoin and Ether. Many consortiums and financial institutions are also researching and investing resources into private or permissioned blockchain platforms rather than open platforms like the Avalanche Network. In addition, AVAX is supported by fewer trading platforms than more established digital assets, such as Bitcoin and Ether, which could impact its liquidity. In addition, the Avalanche Network is in direct competition with other smart contract platforms, such as the Ethereum, Polkadot, Sui and Cardano networks. Competition from the emergence or growth of alternative digital assets in the smart contract platforms sectors could have a negative impact on the demand for, and price of, AVAX and thereby adversely affect the value of the Shares. Investors may also invest in AVAX through means other than the Shares, including through direct investments in AVAX and other financial vehicles, including securities backed by or linked to AVAX and digital asset financial vehicles similar to the Trust. In particular, the Trust and the Sponsor face competition with respect to the creation of competing exchange-traded spot AVAX products, among other digital asset vehicles, several of which have applications pending before the SEC or that have already received SEC approval. The SEC and CFTC have also issued a joint staff statement providing the respective staffs’ view, that current law does not prohibit SEC-or CFTC- registered exchanges from facilitating trading of certain spot crypto asset products, which may expose the Trust to additional types of competition. Whether the Trust is successful in maintaining its scale and achieving its intended competitive position may be impacted by a range of factors, including the Trust’s timing in entering the market relative to competing spot AVAX exchange-traded products, its fee structure relative to those competing products and potentially new platforms for investing in AVAX. The Trust’s competitors may offer a more liquid secondary market for their shares, and/or may charge a substantially lower fee than the Sponsor’s Fee or expense ratio now or in the future. If the Trust fails to continue to maintain or grow sufficient scale due to competition, the Sponsor may have difficulty raising sufficient revenue to cover the costs associated with maintaining the Trust and such shortfalls could impact the Sponsor’s ability to properly invest in robust ongoing operations and controls of the Trust to minimize the risk of operating events, errors, or other forms of losses to the shareholders. Furthermore, the Trust may fail to continue to attract adequate liquidity in the secondary market due to such competition, resulting in a small number of Authorized Participants willing to make a market in the Shares, which in turn could result in the Shares trading at a significant premium or discount for extended periods. Likewise, market and financial conditions, and other conditions beyond the Sponsor’s control, may make it more attractive to gain exposure to AVAX through other vehicles, rather than the Trust. In addition, to the extent digital asset financial vehicles other than the Trust tracking the price of AVAX are formed and represent a significant proportion of the demand for AVAX, large purchases or redemptions of the securities of these digital asset financial vehicles, or private funds holding AVAX, could negatively affect the Index Price, the NAV, the NAV per Share, the value of the Shares, the Principal Market NAV and the Principal Market NAV per Share. Accordingly, there can be no assurance that the Trust will be able to maintain its scale and achieve its intended competitive positioning relative to competitors, which could adversely affect the performance of the Trust and the value of the Shares. Congestion or delay in the Avalanche Network may delay purchases or sales of AVAX by the Trust. Increased transaction volume could result in delays in the recording of transactions due to network congestion. Moreover, unforeseen system failures, disruptions in operations, or poor connectivity may also result in delays in the recording of transactions on the Avalanche Network. For example, in February 2024, the Avalanche Network experienced a several-hour stall in block finalization caused by a software bug in validator communications, which temporarily prevented new blocks from being added to the blockchain until validators upgraded their software to a corrected version. Any delay in the Avalanche Network could affect an Authorized Participant’s ability to buy or sell AVAX at an advantageous price resulting in decreased confidence in the Avalanche Network. Over the longer term, delays in
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