VanEck Introduces Staking to European Solana ETN, Offering Investors Lucrative Rewards

VanEck has enabled staking on its Solana exchange-traded note (ETN), VSOL, allowing European-based investors to earn passive income through staking rewards. 

According to VanEck’s Head of Digital Asset Research, Matthew Sigel, the rewards will accrue and be re-invested daily, with this additional value being automatically reflected in the daily net asset value (NAV) of VSOL. Claiming the staking rewards won’t require any additional action from investors.

Read about $VSOL staking & fees –> https://t.co/wwdhYfta2y

EU Frens, please read the VSOL prospectus before investing –>https://t.co/OWSejUxG4s

— matthew sigel, recovering CFA (@matthew_sigel) October 21, 2024

VSOL was launched in the European market in 2021, trading on the German-based Deutsche Börse exchange — as of October 2024 it had US$73.8 million (AU$110m) worth of assets under management.

Related: Solana Leads 2024 Token Launches, Capturing Over 87% in Recent Surge

Staking Rewards to Be Distributed Equally

VanEck said VSOL staking will be fully non-custodial. The asset manager explained this means “that the custodian of the ETNs assets remains in full control of the staked assets”, adding that this method of staking means “there is no lending risk involved”. 

In terms of how staking rewards are paid out, VanEck says investors will receive 75% of the staking rewards with VanEck pocketing the other 25%. Investors won’t need to do anything to claim rewards — they’ll be paid automatically and rewards will be distributed among all VSOL investors equally (proportional to investment), regardless of how long they’ve held:

Any rewards accrued will then be reflected in the NAV on a daily basis.

More Technical Details of Staking Model

In response to a question asked on X/Twitter regarding whether VanEck run their own Solana validator node for staking, Sigel pointed out that regulation prevents asset managers from holding “customer funds directly due to the need for third-party segregation to protect client assets”. VanEck added that “staking customer funds to asset-manager-owned infrastructure raises similar concerns”.

Related: As Odds of Solana ETF Drop VanEck Exec Points to Potential Solution

In regulated TradFi, asset managers can't hold customer funds directly due to the need for third-party segregation to protect client assets. Staking customer funds to asset-manager-owned infrastructure raises similar concerns.

We utilize the Physical SOL held by the ETN for… pic.twitter.com/8ACncxXLHF

— matthew sigel, recovering CFA (@matthew_sigel) October 21, 2024

To ensure regulatory compliance, Sigel says VanEck uses a model whereby the Physical SOL (SOL tokens) held by the ETN are staked to a validator node by the custodian under direction from VanEck, not by VanEck directly. The validator node the SOL is staked to is managed by a third-party staking provider and control of the SOL remains with the custodian at all times.