VanEck Brings Staking Income to Avalanche ETF with VAVX Filing Update

VanEck is reshaping its approach to Avalanche digital assets by adding a staking rewards component to its upcoming VAVX exchange-traded fund. In an amended S-1 filing submitted to the U.S. Securities and Exchange Commission, the investment firm revealed plans to activate yield generation through protocol participation, allowing the fund to harness additional returns for investors beyond simple price appreciation.

The updated proposal marks a significant shift in how traditional asset managers approach cryptocurrency holdings. By capitalizing on Avalanche’s proof-of-stake consensus mechanism, VanEck aims to create multiple income streams for VAVX shareholders while maintaining robust security standards. Given that AVAX currently trades at $10.14, the timing appears strategic as institutional interest in yield-bearing crypto products continues to accelerate.

How VAVX’s Staking Strategy Creates Value

At the core of VanEck’s innovation is a straightforward staking model: up to 70% of the fund’s AVAX holdings will be deployed to earn protocol rewards. Rather than leaving tokens idle, this approach converts a passive asset into an income-generating position. Coinbase Crypto Services has been designated as the initial staking provider, with rewards flowing back to the fund after a 4% service fee deduction.

All accumulated yields will be reflected in the fund’s net asset value, meaning investors participate directly in staking economics without managing validators or technical complexity themselves. This simplifies what has historically been a barrier to entry for institutional participation in proof-of-stake networks.

Cold Wallet Custody and Security Framework

To address institutional concerns around asset safety, VanEck structured the fund with multiple layers of protection. AVAX holdings will be maintained with regulated custodians including Anchorage Digital and Coinbase Custody, which employ offline cold storage solutions to eliminate hacking risks. The fund will avoid leverage and derivatives, maintaining a straightforward, transparent structure aligned with traditional ETF standards.

Price tracking occurs through the MarketVector Avalanche Benchmark Rate, a custom index constructed from major cryptocurrency exchanges. If approved by regulators, VAVX will commence trading on Nasdaq under its designated ticker, offering institutional and retail investors seamless access to Avalanche exposure combined with staking benefits.

The Emerging Landscape of Yield-Bearing Crypto ETFs

VanEck’s staking integration joins a broader wave of product innovation, with competitors like Bitwise recently updating their Avalanche ETF filing with similar yield-generation capabilities. This convergence reflects regulatory progress: U.S. authorities have clarified that staking rewards within ETF structures need not trigger adverse tax treatments, removing a major compliance obstacle for asset managers.

The competitive race underscores how institutional adoption is reshaping crypto infrastructure. Rather than treating digital assets as pure speculation plays, traditional finance firms now engineer products that align with the operational realities of blockchain networks themselves. For Avalanche and its community, this institutional validation through staking integration represents significant validation of the ecosystem’s maturity.