Grayscale Solana Staking ETF Annual Report - A Comprehensive Investor Summary

This comprehensive summary distills key information from the Grayscale Solana Staking ETF (GSOL) annual report, offering investors a clear understanding of its performance, operations, and strategic direction over the past year. We've highlighted essential details to help you make informed investment decisions.

What is the Grayscale Solana Staking ETF and How It Performed This Year

The Grayscale Solana Staking ETF (GSOL), initially formed on November 9, 2021, provides investors with exposure to Solana (SOL) tokens without directly buying and holding them. Its core strategy involves holding SOL and actively "staking" it. Staking means committing SOL to help secure the Solana network, in return for earning additional SOL as rewards.

This past year, the Trust experienced significant strategic changes. It first changed its name from "Grayscale Solana Trust (SOL)" to "Grayscale Solana Trust ETF" on October 28, 2025, and subsequently to "Grayscale Solana Staking ETF" on January 5, 2026. These changes highlight its evolution into an exchange-traded product and its focus on a staking strategy.

The Trust achieved a pivotal milestone with the approval to list its shares on NYSE Arca, a major stock exchange, effective October 29, 2025. Shares now trade under the ticker symbol "GSOL." This uplisting was crucial. Previously, the Trust's shares traded on the less liquid OTCQX market, often experiencing significant premiums or discounts compared to the actual value of its underlying SOL holdings. Since its move to NYSE Arca, the Sponsor (Grayscale Investments, LLC) reports the ETF has significantly improved its ability to track the value of its SOL holdings, aligning with its primary investment objective.

As of December 31, 2025, the Trust held approximately 0.23% of all Solana tokens in circulation. By March 6, 2026, 17,744,135 shares of GSOL were outstanding. The Trust maintains a straightforward investment approach, avoiding risky strategies like borrowing money (leverage) or using complex financial instruments (derivatives).

Financial Performance and Key Metrics

Unlike traditional companies, GSOL's objective isn't to generate "profit" but to reflect the value of its SOL holdings, including staking rewards, after accounting for operational costs.

For the fiscal year ended December 31, 2025, the Grayscale Solana Staking ETF's performance was shaped by its core strategy and market dynamics.

• Premium/Discount to NAV: Before its NYSE Arca listing, shares often traded at significant discounts or premiums to the underlying asset value. Following the NYSE Arca listing, this average premium/discount significantly narrowed, demonstrating improved market efficiency in tracking the Net Asset Value (NAV).
• Staking Rewards: The Trust generated substantial staking rewards, which increased its SOL holdings.
• Operating Expenses: The Trust incurs annual operating expenses, including a management fee, which impacts its overall performance relative to directly holding SOL.
• Net Performance (NAV Basis): The ETF's NAV per share increased for the year, reflecting the performance of Solana (SOL) price over the same period, after accounting for fees and tracking differences.

Staking rewards are a vital component of the Trust's strategy, helping to grow its SOL holdings and enhance shareholder value. The NYSE Arca uplisting has been instrumental in improving the ETF's price tracking, a key step toward achieving its investment objective.

Operational Highlights and Challenges

Key Achievements:

• Uplisting to NYSE Arca: This transformative event on October 29, 2025, significantly enhanced the ETF's accessibility, liquidity, and market efficiency.
• Improved NAV Tracking: Following the uplisting, the ETF's market price consistently tracked its underlying NAV much more closely, reducing the historical premiums and discounts that previously impacted investor returns.
• Strategic Clarity: The name changes, culminating in "Grayscale Solana Staking ETF," clearly communicate its core activities and strategic focus on staking.
• Consistent Staking Rewards: The Trust successfully generated substantial staking rewards, contributing to the growth of its underlying SOL holdings.

Ongoing Challenges:

• Historical Price Discrepancies: Before the uplisting, the ETF's shares often traded at significant deviations from its NAV. While tracking has improved, this remains a historical concern.
• Regulatory Uncertainty: The evolving regulatory landscape for digital assets continues to present an overarching challenge, impacting market sentiment and potential operational frameworks.

Financial Health and Liquidity

The Grayscale Solana Staking ETF primarily holds Solana tokens and does not maintain significant cash reserves for operations or incur traditional debt. Its financial health directly depends on the value and liquidity of its SOL holdings.

Liquidity Considerations:

• Staking Lock-up: Staked SOL can be subject to lock-up periods, depending on network conditions and validator choices. This means the Trust cannot immediately liquidate all SOL if needed, posing a liquidity risk.
• Reliance on Authorized Participants: The ETF relies on designated Authorized Participants (APs) to facilitate share creation and redemption. The effective functioning of these APs is crucial for maintaining market liquidity and ensuring the ETF's price tracks its NAV.
• Absence of In-Kind Creations/Redemptions: A critical structural difference from typical ETFs is the current absence of "in-kind" creation and redemption mechanisms. This means investors cannot directly exchange ETF shares for SOL tokens, and APs cannot create new shares by delivering SOL. This structural limitation can hinder the arbitrage process that typically keeps ETF market prices closely aligned with NAV, potentially leading to persistent premiums or discounts, similar to a closed-end fund.

Key Risks That Could Affect Your Investment

Investing in GSOL carries inherent risks, particularly given its exposure to the volatile digital asset market and its unique structure:

• Solana Price Volatility: The value of SOL is highly volatile and can experience rapid and dramatic price swings. Historically, SOL has exhibited high daily price fluctuations and significant annual volatility. You could lose significant value, potentially all of your investment.
• Regulatory Uncertainty: This is a paramount risk. Governments and regulators globally, including in the U.S., are still developing frameworks for digital assets and staking. New laws or interpretations could negatively impact SOL's value, the ETF's operations, or even its legality. Regulators could classify SOL as a "security," which would trigger extensive compliance requirements and potentially force the ETF to restructure or liquidate.
• Absence of In-Kind Creation/Redemption Risk: As highlighted, the lack of in-kind creation and redemption mechanisms means the ETF's market price may not always accurately reflect its underlying NAV. This could result in shares trading at a significant premium or discount, impacting your entry or exit price.
• Staking-Specific Risks:
  • Slashing Risk: While rare, staked SOL can face "slashing" penalties if the validator node supporting the staking activity acts maliciously or performs poorly, leading to a partial loss of staked SOL.
  • Lock-up Periods: Staked SOL is inaccessible for a period, limiting the Trust's ability to react quickly to market changes or redemption requests.
  • Evolving Staking Rules: The rules and economic models for staking on the Solana network can change, potentially affecting reward rates or operational requirements.
  • Taxation of Staking Rewards: The tax treatment of staking rewards is complex and evolving. Investors could face tax liabilities on earned rewards even if the Trust does not distribute those rewards as cash, creating a potential "phantom income" scenario.
• Third-Party Reliance: The ETF relies on critical third-party service providers, including its custodian for secure SOL storage and staking providers. Failure, insolvency, or operational issues with these providers could disrupt operations or lead to asset loss.
• Market Instability and Manipulation: Digital asset markets are less regulated and transparent than traditional financial markets, making them susceptible to manipulation (e.g., "wash-trading," "front-running") and sudden disruptions.
• Management Fees: The annual management fee is a guaranteed drag on performance. The ETF must outperform the underlying SOL price by at least this amount just to break even with direct SOL ownership.
• Conflicts of Interest: The Sponsor and its affiliates may have other business interests that could conflict with GSOL shareholders' best interests.

Competitive Positioning

As of December 31, 2025, the Trust's holding of approximately 0.23% of total SOL in circulation positions it as a significant, though not dominant, participant in the Solana ecosystem. Its primary competition includes direct ownership of SOL, other digital asset trusts, futures-based exchange-traded products, and Solana ETPs available in other jurisdictions.

Strategic Direction and Future Outlook

The Grayscale Solana Staking ETF's core strategic objective remains consistent: to provide investors with exposure to SOL's price movements, enhanced by staking rewards, and to ensure its market price tracks its NAV as closely as possible. The successful NYSE Arca uplisting has significantly advanced this goal, demonstrating improved market efficiency.

The ETF plans to continue its strategy of holding and staking SOL, without employing leverage or derivatives. The Sponsor will remain vigilant regarding the evolving regulatory landscape and market trends, adapting operations as necessary to comply with new requirements and optimize its investment objective.

Market Trends and Regulatory Changes Affecting GSOL

The digital asset landscape is dynamic, and GSOL's performance and operations are directly influenced by these shifts:

• Evolving Regulatory Frameworks: The ongoing development of regulatory frameworks for digital assets and staking, both domestically and internationally, represents the most significant external factor. Future regulations could impact SOL's market value, the legality of staking, or the ETF's operational requirements.
• Potential "Security" Classification: Regulators classifying SOL as a "security" remains a critical concern. Such a classification would subject SOL and the ETF to stringent securities laws, potentially leading to significant operational changes, increased compliance costs, or even the ETF's liquidation.
• Taxation of Digital Assets: The tax rules for digital assets and staking rewards remain ambiguous and subject to change. This evolving tax landscape could create unexpected liabilities for the Trust and its investors, impacting net returns.
• Overall Digital Asset Market Health: The broader health, stability, and transparency of the digital asset market, including the exchanges where SOL trades, directly influence the ETF's liquidity and performance. Increased institutional adoption and clearer regulatory guidance could positively impact the market, while adverse events could lead to significant downturns.