ETF issuer VanEck has taken a big step into the digital asset space, filing for the first U.S. Solana exchange-traded fund (ETF). Matthew Sigel, head of digital asset research at VanEck, shares why the company believes Solana (SOL) qualifies as a commodity and the motivation behind this groundbreaking filing.
I am excited to announce that VanEck just filed for the FIRST Solana exchange-traded fund (ETF) in the US. Some thoughts on why we believe SOL is a commodity are below.Why did we file for it?A competitor to Ethereum, Solana is open-source blockchain software designed to… pic.twitter.com/XwwPy8BXV2
— matthew sigel, recovering CFA (@matthew_sigel) June 27, 2024
Why did VanEck apply for the Solana ETF?
VanEck’s decision to apply for the Solana ETF was based on Solana’s unique capabilities as a blockchain platform. Solana is an open source blockchain designed to handle a variety of applications, including payments, transactions, gaming, and social interactions. Unlike other blockchains, Solana operates as a global single state machine without the need for sharding or second-layer solutions.
This approach offers a powerful combination of scalability, speed, and low cost, potentially providing a superior user experience for many use cases. Solana's ability to process thousands of transactions per second with extremely low fees, coupled with its advanced security mechanism that combines proof-of-history and proof-of-stake, makes it a powerful and Easily accessible blockchain solutions.
VanEck believes this combination of high throughput, low fees, strong security and an active community makes Solana an attractive option for ETFs. This will give investors access to a diverse and innovative open source ecosystem.
Solana as a digital commodity
VanEck believes that Solana’s native token, SOL, functions similarly to other digital commodities such as Bitcoin and Ethereum. SOL is used to pay for transaction fees and computing services on the Solana blockchain, similar to how Ethereum is used on the Ethereum network. SOL can be traded on digital asset platforms or used for peer-to-peer transactions, highlighting its practicality and value.
The Solana ecosystem supports a wide range of applications and services, from decentralized finance (DeFi) to non-fungible tokens (NFTs), and this diversity emphasizes SOL’s utility and enhances its value as a digital commodity. Additionally, Solana’s decentralized nature, with no single intermediary or entity controlling the network, adds to its appeal.
Decentralization and security
The Solana network's transaction verification and records are maintained by a diverse group of independent validators located around the world. These validators are responsible for processing transactions and securing the network, ensuring that no single entity can monopolize the system.
This decentralized infrastructure aligns SOL with other established digital commodities, reinforcing VanEck’s belief that SOL is a valuable commodity for investors, developers, and entrepreneurs. It provides an alternative to the traditional app store model with high practicality and economic feasibility.
Bloomberg analyst comments: Political power could make it happen
VanEck’s filing for the first Solana ETF in the U.S. marks an important step in the digital asset space. Solana’s combination of scalability, speed, low cost, strong security, and decentralization make it a strong candidate for an ETF.
Bloomberg analyst Eric Balchunas said his knee-jerk reaction was "oh, this will never be approved because there are no Solana futures." But if there is a change in the American presidency, anything is possible. Imagine crypto mom Hester Peirce (the crypto-friendly SEC commissioner) or someone similar running the Securities and Exchange Commission (SEC).
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