Trust Objective and Determination of Principal Market NAV and NAV The Trust’s investment objective is for the value of the Shares (based on AVAX per Share) to reflect the value of AVAX held by the Trust, including AVAX earned as Staking Consideration, determined by reference to the Index Price, less the Trust’s expenses and other liabilities. There can be no assurance that the Trust will be able to achieve its investment objective. While an investment in the Shares is not a direct investment in AVAX, the Shares are designed to provide investors with a cost-effective and convenient way to gain investment exposure to AVAX. A substantial direct investment in AVAX may require expensive and sometimes complicated arrangements in connection with the acquisition, security and safekeeping of the AVAX and may involve the payment of substantial fees to acquire such AVAX from third-party facilitators through cash payments of U.S. dollars. Because the value of the Shares is designed to be correlated with the value of AVAX held by the Trust, it is important to understand the investment attributes of, and the market for, AVAX. The Trust’s AVAX are carried, for financial statement purposes, at fair value as required by U.S. generally accepted accounting principles (“GAAP”). The Trust determines the fair value of AVAX based on the price provided by the Digital Asset Market (defined below) that the Trust considers its principal market as of 4:00 p.m., New York time, on the valuation date. The net asset value of the Trust determined on a GAAP basis is referred to in this prospectus as “Principal Market NAV.” “Digital Asset Market” means a “Brokered Market,” “Dealer Market,” “Principal-to-Principal Market” or “Exchange Market,” as each such term is defined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Master Glossary. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Principal Market and Fair Value Determination” in this prospectus for more information on the Trust’s principal market selection. The Trust uses the Index Price to calculate its “NAV,” a non-GAAP metric, which is the aggregate value, expressed in U.S. dollars, of the Trust’s assets (other than U.S. dollars or other fiat currency), less the U.S. dollar value of the Trust’s expenses and other liabilities calculated in the manner set forth under “Business —Valuation of AVAX and Determination of NAV.” “NAV per Share” is calculated by dividing NAV by the number of Shares then outstanding. NAV and NAV per Share are not measures calculated in accordance with GAAP. NAV is not intended to be a substitute for the Trust’s Principal Market NAV calculated in accordance with GAAP, and NAV per Share is not intended to be a substitute for the Trust’s Principal Market NAV per Share calculated in accordance with GAAP. Staking The Trust Agreement provides that the Trust may engage in Staking, but only if (and, then, only to the extent that) the Staking Condition has been satisfied. The Sponsor expects that the Staking Condition will be satisfied as to the particular form of Staking described herein, and the Sponsor intends to cause the Trust to engage in Staking as described herein, in connection with the commencement of the offering of the Shares pursuant to the registration statement of which this prospectus forms a part. The Sponsor may in the future modify the form of Staking in which the Trust engages, but only if (and, then, only to the extent that) the Staking Condition has been satisfied with respect to any such modified form of Staking, and subject to compliance with any additional requirements that may arise in connection with satisfaction of the Staking Condition with respect thereto. Staking Arrangements and Provider-Facilitated Staking Model The Sponsor, on behalf of the Trust, has entered into written arrangements (the “Staking Arrangements”) with the Custodian to stake the Trust’s AVAX to one or more vetted third party staking providers (each, a “Staking Provider”) operating validator software and associated hardware (“Provider-Facilitated Staking”). The Sponsor anticipates that the Trust’s AVAX will be staked exclusively by means of Provider-Facilitated Staking. The Staking Arrangements are set forth in the Staking Addendum to the Custodial Services Agreement between the Trust and the Custodian, a copy of which is attached as an exhibit to the registration statement of which this prospectus forms a part.
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