Can a Solana ETF Succeed in the US Amidst Significant Daily Issuance and Unlock Schedule?
The recent approval of the first spot Solana exchange-traded fund (ETF) in Brazil has sparked discussions about whether the United States will follow suit. While some are hopeful, many financial experts remain cautious due to concerns about Solana's native token, SOL.
One major concern is the significant daily issuance of SOL tokens. Data from August 11 indicates that over 162,503 SOL tokens, worth about $25 million, are issued daily. These tokens serve as rewards for validators who maintain network security. Critics argue that this high issuance rate could increase selling pressure and destabilize the asset’s long-term value.
Smartestmoney.eth, a prominent critic, questions whether there is enough market demand for SOL given its high emission rate. He highlighted the potential supply overhang of 165,000 daily emissions and questioned who will buy SOL when the supply exceeds demand.
Furthermore, the absence of an ETF could limit institutional interest in Solana, especially when influential figures like Larry Fink are turning towards Ethereum.
A pseudonymous X user, Caramel, raised concerns about Solana’s unlock schedule, noting that 20% of SOL is still locked, with a significant unlock of 7.5 million SOL planned for March 2025. Many worry that venture capitalists might exploit this 2025 unlock to profit at the expense of others.
Robert Mitchnick, BlackRock's digital asset head, expressed skepticism about the viability of a Solana ETF, citing its relatively small market cap compared to BTC and ETH.
Solana's network stability issues: The network has experienced severe downtime incidents and rollbacks, which may deter investors. Solana issuers will need to demonstrate that the network is stable enough to protect investors.
Despite these challenges, some industry players remain optimistic. Asset managers like VanEck and 21Shares have already filed for a Solana ETF in the US. The SEC’s decision is expected by mid-March 2025.
