arrangements with the Trust and such discontinuance affects the Trust’s AVAX, for so long as is reasonably necessary to re-establish those arrangements or to establish similar arrangements with other parties, (viii) if the Custodian discontinues its arrangements with the Staking Provider and such discontinuance affects the Trust’s AVAX, for so long as is reasonably necessary to re-establish those arrangements or to establish similar arrangements with other parties, (ix) in the event of a change in applicable law or regulation, (x) as necessary to maintain a Liquidity Sleeve (as defined herein), (xi) as necessary pursuant to a “contingent liquidity arrangement” within the meaning of Section 6.02(12) of IRS Revenue Procedure 2025-31 or (xii) in accordance with any other exception that is expressly contemplated by an opinion, ruling or tax guidance that satisfies the Staking Condition. All AVAX received by the Trust in connection with the creation of new Shares, or as Native Staking Consideration, would also be staked upon receipt by the Trust, unless one or more of the exceptions described in clauses (i)-(xii) above applies. The Sponsor also expects to satisfy the Staking Condition with respect to certain liquidity procedures prior to the commencement of the offering of the Shares, which it believes will ensure that it will satisfy existing and reasonably foreseen redemption requests. Specifically, the Sponsor intends to maintain a portion of unstaked AVAX in the Trust (the “Liquidity Sleeve”). Because the AVAX in the Liquidity Sleeve is freely transferable, there is no timing mismatch between settlement of Shares in primary market redemptions and the AVAX transfer time. The percentage of the Trust's AVAX comprising the Liquidity Sleeve will be dynamic and subject to adjustment based on anticipated primary and secondary market activity of the Shares and the AVAX de-activation process. As of the date of this filing, the Sponsor generally seeks to stake as much of the Trust's AVAX as is practicable (i.e., up to 100%) at all times, with the remainder of the Trust's AVAX remaining unstaked in order to address the various exceptions and other considerations described herein, including the satisfaction of the Staking Condition. The Sponsor cannot provide an expected percentage of the Trust's assets that will be held in the Liquidity Sleeve in the ordinary course as the size of the Liquidity Sleeve may be adjusted in order to address liquidity needs, anticipated redemption activity, and other considerations described herein and further described in the Trust's staking policy. The Sponsor will make the Trust's staking policy available to shareholders on the Sponsor's website. The percentage of the Trust's AVAX that is staked each day will be reported the following day at 4:00 p.m., New York time, on etfs.grayscale.com/gava. In the future and subject to the satisfaction of the Staking Condition thereto, the Sponsor, on behalf of the Trust, may be able to enter into short-term financing arrangements or implement other mechanisms to manage AVAX liquidity constraints. For example, in the future, the Sponsor may arrange for the Trust to enter into redemption orders involving the delivery of AVAX to a Liquidity Provider on a delayed basis (i.e., when the appropriate number of the Trust’s AVAX are or become freely transferable), after the Liquidity Provider has delivered cash to the Trust to settle the redemption order. Under a delayed delivery order, the Variable Fee payable by an Authorized Participant would be adjusted, based on the estimated length of time to AVAX delivery, to compensate the Liquidity Provider for agreeing to accept settlement on a delayed basis. No further adjustment to the Variable Fee would be 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. Assuming that the Trust is then permitted to operate an ongoing redemption program, due to the length of time AVAX may be locked, there is a risk that the Trust could become unable to timely meet excessive redemption requests in amounts that are greater than the portion of the Trust’s AVAX that remains un-staked, leading to temporary delays in settlement and, in extreme scenarios, the temporary unavailability of the Trust’s redemption program. The Staking Provider will not be able to transfer unstaked AVAX or Staking Consideration to another address on the Avalanche Network. Although the Sponsor anticipates, if the Staking Condition has been satisfied with respect to such activities, that the Trust may enter into financing arrangements in order to fulfill redemption requests if the Trust’s unstaked AVAX is insufficient to do so, there can be no assurance that such arrangements will be available as intended or
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