Fidelity Solana Fund (FSOL) Eyes Staking Rewards for SOL ETF Outperformance

TL;DR

**Fidelity's Solana ETF (FSOL) is a bullish signal for SOL, offering staking rewards and institutional validation, but expect high volatility.**

AI Summary

The Fidelity Solana Fund (FSOL) is an exchange-traded product aiming to track the performance of SOL, the native token of the Solana blockchain, adjusted for expenses and staking rewards. The Trust expects to outperform its Fidelity Solana Reference Rate Index due to staking-based amounts, which involve utilizing a Custodian to stake all of the Trust's SOL with trusted node operators, reserving some SOL for redemptions and expenses. The Index is calculated every 15 seconds using a volume-weighted median price methodology from eligible SOL spot markets. As of the prospectus date, the Seed Capital Investor, an affiliate of the Sponsor, purchased an initial 1 Share, then redeemed it for cash to purchase an undisclosed number of 'Seed Baskets' of Shares, with total proceeds to the Trust from the Seed Baskets also undisclosed. The Trust subsequently purchased an undisclosed amount of SOL with these proceeds. The price of SOL on the Index ranged from $104.28 to $181.80 between March 31, 2025, and May 31, 2025, with a straight average of $148.46, indicating significant volatility.

Why It Matters

This S-1/A filing signals Fidelity's intent to launch a Solana-backed ETF, FSOL, which could significantly legitimize SOL as an institutional investment asset, similar to Bitcoin and Ethereum ETFs. For investors, it offers a regulated, accessible avenue to gain exposure to SOL's price movements and staking rewards without direct custody risks. This move intensifies competition in the crypto ETF space, particularly against other potential Solana ETF issuers, and could drive increased liquidity and price stability for SOL. Employees of Fidelity and its partners will be involved in managing this new product, while customers gain a new investment vehicle, potentially broadening the market for Solana.

Risk Assessment

Risk Level: high — The filing explicitly states, "AN INVESTMENT IN THE TRUST INVOLVES SIGNIFICANT RISKS AND MAY NOT BE SUITABLE FOR SHAREHOLDERS WHO ARE NOT IN A POSITION TO ACCEPT MORE RISK THAN MAY BE INVOLVED WITH EXCHANGE-TRADED PRODUCTS THAT DO NOT HOLD SOL. THE SHARES ARE SPECULATIVE SECURITIES. THEIR PURCHASE INVOLVES A HIGH DEGREE OF RISK AND YOU COULD LOSE YOUR ENTIRE INVESTMENT." Furthermore, SOL's price volatility is highlighted, with the Index price ranging from $104.28 to $181.80 between March 31, 2025, and May 31, 2025.

Analyst Insight

Investors should approach FSOL with caution, recognizing the high-risk, speculative nature of SOL. Consider allocating a small portion of a diversified portfolio to FSOL only if comfortable with potential significant losses, and closely monitor SOL price volatility, which saw a range of $104.28 to $181.80 in just two months.

Financial Highlights

debt To Equity

N/A

revenue

Undisclosed

operating Margin

N/A

total Assets

Undisclosed

total Debt

Undisclosed

net Income

Undisclosed

eps

Undisclosed

gross Margin

N/A

cash Position

Undisclosed

revenue Growth

N/A

Key Numbers

• $104.28 — Lowest Index price for SOL (Observed between March 31, 2025, and May 31, 2025)
• $181.80 — Highest Index price for SOL (Observed between March 31, 2025, and May 31, 2025)
• $148.46 — Straight average Index price for SOL (Calculated between March 31, 2025, and May 31, 2025)
• 25,000 — Shares per Basket (Block size for creation and redemption of Shares)
• 15 seconds — Index calculation frequency (Frequency of Volume-Weighted Median Price (VWMP) calculation)
• 60 minutes — Rolling increment for VWMP (Timeframe for VWMP spot market data)

Key Players & Entities

• Fidelity Solana Fund (company) — Registrant and exchange-traded product
• FD Funds Management LLC (company) — Sponsor of the Trust
• SOL (other) — Native token of the Solana blockchain
• Cboe BZX Exchange, Inc. (company) — Expected listing exchange for FSOL Shares
• Nicole Macarchuk (person) — Contact for FD Funds Management LLC
• Morrison C. Warren, Esq. (person) — Legal counsel from Chapman and Cutler LLP
• CSC Delaware Trust Company (company) — Trustee of the Trust
• State Street Bank and Trust Company (company) — Transfer Agent and Cash Custodian
• SEC (regulator) — Securities and Exchange Commission
• FMR LLC (company) — Parent company of the Sponsor

FAQ

Risk Factors

• Volatility of SOL Prices [high — market]: The price of SOL has exhibited significant volatility, ranging from $104.28 to $181.80 between March 31, 2025, and May 31, 2025. This volatility poses a risk to the Trust's ability to accurately track the performance of SOL and could impact the value of investors' holdings.
• Reliance on Custodian and Node Operators [medium — operational]: The Trust relies on a Custodian to stake all of its SOL with trusted node operators. Any operational failures, security breaches, or misconduct by the Custodian or these node operators could result in the loss of staked SOL or failure to earn staking rewards, directly impacting the Trust's performance.
• Uncertainty of Digital Asset Regulation [high — regulatory]: The regulatory landscape for digital assets, including Solana and its native token SOL, is evolving. Changes in regulations could impact the Trust's ability to operate, the liquidity of SOL, or the tax treatment of the Trust and its investors.
• Staking Rewards and Expenses [medium — financial]: While the Trust aims to outperform its index through staking rewards, the actual amount of rewards earned and the associated expenses (e.g., Custodian fees, node operator fees) are subject to change and could negatively affect the Trust's net performance.
• Index Calculation Methodology [medium — operational]: The Index is calculated every 15 seconds using a volume-weighted median price methodology from eligible SOL spot markets. Any inaccuracies or disruptions in the data feeds or the calculation process could lead to an incorrect NAV for the Trust.
• Seed Capital Investor Structure [low — legal]: The initial Seed Capital Investor, an affiliate of the Sponsor, purchased and redeemed shares, then acquired 'Seed Baskets' for an undisclosed amount of SOL. The lack of transparency around this initial funding and SOL acquisition could raise questions about market fairness or potential conflicts of interest.

Industry Context

The digital asset fund industry is rapidly evolving, with increasing institutional interest in passively tracking major cryptocurrencies like Solana. Competitors include other crypto-focused ETFs and trusts, as well as direct investment in SOL. The industry faces ongoing challenges related to regulatory clarity, market volatility, and the security of digital assets.

Regulatory Implications

The evolving regulatory landscape for digital assets presents a significant risk. Changes in SEC guidance, commodity regulations, or specific rules pertaining to staking could impact the Trust's structure, operations, and the classification of SOL, potentially affecting investor protections and market access.

What Investors Should Do

1. Monitor SOL price volatility closely, as it directly impacts the Trust's NAV and potential returns.
2. Understand the risks associated with staking, including counterparty risk with the Custodian and node operators, and potential loss of staked assets.
3. Evaluate the Trust's expense ratio and how staking rewards are expected to offset these costs and potentially outperform the benchmark index.
4. Stay informed about regulatory developments in the digital asset space, as these could materially affect the Trust's operations and the value of SOL.
5. Review the Trust's methodology for calculating NAV and the frequency of its index pricing (every 15 seconds) to assess its accuracy and responsiveness to market movements.

Glossary

SOL

The native cryptocurrency of the Solana blockchain. (The underlying asset that the Fidelity Solana Fund aims to track.)

Fidelity Solana Reference Rate Index

An index designed to measure the performance of SOL, used as a benchmark for the Trust. (The primary benchmark against which the Trust's performance will be measured.)

Volume-Weighted Median Price (VWMP)

A pricing methodology that considers both the price and trading volume of an asset across various markets to determine a representative price. (The method used to calculate the Index price every 15 seconds, aiming for accuracy.)

Seed Capital Investor

An entity, affiliated with the Sponsor, that provided initial capital for the Trust. (Played a role in the initial formation and funding of the Trust, though details are undisclosed.)

Basket

A block of Shares (25,000 Shares) used for the creation and redemption process of the Trust's Shares. (The unit of trading for institutional investors to create or redeem Trust Shares, influencing liquidity.)

Staking

The process of actively participating in transaction validation (consensus) on a proof-of-stake blockchain by holding and pledging crypto assets. (The Trust's strategy to generate additional yield beyond SOL price appreciation by staking its holdings.)

Custodian

A financial institution responsible for safeguarding the Trust's assets, including staking its SOL. (A critical service provider whose performance directly impacts the Trust's assets and staking operations.)

Year-Over-Year Comparison

As this is an S-1/A filing for a newly established fund, there is no prior filing to compare against. Key metrics such as revenue, net income, and assets under management are not yet established and will be determined post-launch and as the fund grows.

Key Financial Figures

• $104.28 — y 31, 2025, the Index price ranged from $104.28 to $181.80, with the straight average b
• $181 — the Index price ranged from $104.28 to $181.80, with the straight average being $14
• $148.46 — 181.80, with the straight average being $148.46. See "The Trust and SOL Prices." The

Filing Documents

• d941170ds1a.htm (S-1/A) — 866KB
• g941170g0613065158179.jpg (GRAPHIC) — 4KB
• 0001193125-25-192853.txt ( ) — 873KB

RISK FACTORS

RISK FACTORS 23 THE TRUST AND SOL PRICES 73 THE TRUST'S STAKING PROGRAM 77 CALCULATION OF NAV 80 ADDITIONAL INFORMATION ABOUT THE TRUST 82 THE TRUST'S SERVICE PROVIDERS 86 CUSTODY OF THE TRUST'S ASSETS 89 FORM OF SHARES 91 TRANSFER OF SHARES 92 SEED CAPITAL INVESTOR 93 PLAN OF DISTRIBUTION 94 CREATION AND REDEMPTION OF SHARES 96

USE OF PROCEEDS

USE OF PROCEEDS 103 104 CONFLICTS OF INTEREST 105 DUTIES OF THE SPONSOR 107 LIABILITY AND INDEMNIFICATION 109 PROVISIONS OF LAW 112 MANAGEMENT; VOTING BY SHAREHOLDERS 113 BOOKS AND RECORDS 114 114 FISCAL YEAR 115 GOVERNING LAW; CONSENT TO DELAWARE JURISDICTION 115 LEGAL MATTERS 116 EXPERTS 116 MATERIAL CONTRACTS 117 UNITED STATES FEDERAL INCOME TAX CONSEQUENCES 124 PURCHASES BY EMPLOYEE BENEFIT PLANS 130 INFORMATION YOU SHOULD KNOW 131 INTELLECTUAL PROPERTY 132 WHERE YOU CAN FIND MORE INFORMATION 132 PRIVACY POLICY 133 i Table of Contents This Prospectus contains information you should consider when making an investment decision about the Shares of the Trust. You may rely on the information contained in this Prospectus. The Trust and the Sponsor have not authorized any person to provide you with different information and, if anyone provides you with different or inconsistent information, you should not rely on it. This Prospectus is not an offer to sell the Shares in any jurisdiction where the offer or sale of the Shares is not permitted. The Shares of the Trust are not registered for public sale in any jurisdiction other than the United States. ii Table of Contents This Prospectus includes "forward-looking statements" that generally relate to future events or future performance. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or the negative of these terms or other comparable terminology. All statements (other than statements of historical fact) included in this Prospectus that address activities, events or developments that will or may occur in the future, including such matters as movements in the

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View this S-1/A filing on SEC EDGAR