(P1) Asset manager Bitwise launched an exchange-traded fund for Avalanche’s AVAX token on the NYSE Arca that includes staking rewards, a first for the ecosystem that expands crypto ETPs beyond simple price exposure.
(P2) The Bitwise Avalanche Staking ETF (BAVA) launched with $2.5 million in assets and saw over $400,000 in trading volume in its first 90 minutes, a debut that Bloomberg ETF analyst James Seyffart described as “pretty strong.”
(P3) The fund stakes about 70% of its AVAX holdings to generate yield, holding the other 30% in reserve to manage redemptions. It charges a 0.34% annual sponsor fee, undercutting competing planned Avalanche funds from VanEck at 0.40% and Grayscale at 0.50%.
(P4) The launch could drive significant capital inflows into the Avalanche ecosystem, potentially increasing AVAX's price and bolstering network security as more tokens are staked. It also sets a precedent for future crypto ETPs to include yield-bearing mechanisms, potentially attracting more traditional investors to the digital asset space.
Unlike a standard spot ETF, which simply holds an asset and tracks its price, a staking ETF puts the underlying crypto assets to work. By staking the AVAX tokens, the fund participates in securing the Avalanche network and processing transactions. In return, the network pays out rewards in the form of new AVAX.
Bitwise distributes the majority of these rewards to investors, retaining 12% to cover operational costs. This revenue-sharing model is a key differentiator. The structure is similar in principle to institutional staking strategies, such as the Ethereum Foundation’s own staking activities, but packaged within a regulated fund.
BAVA’s fee structure and yield component represent its core competitive advantages. In addition to its lower sponsor fee, new investors receive a full fee waiver for 30 days or until the fund reaches $500 million in assets.
While BAVA is the first to market for a staked Avalanche product, the concept of staking ETFs is gaining traction. 21shares, for example, already offers staking reward distributions for its Polkadot (TDOT) and Sui (TSUI) ETFs. However, these products come with inherent risks, including the potential loss of staked assets through penalties or "slashing" if network validators fail, as well as liquidity constraints during lock-up periods.
This article is for informational purposes only and does not constitute investment advice.
