Stake revenue first enters ETF: Solana may attract 5 billion in funds to reshape the LST landscape

Original | Odaily Odaily Daily ( @OdailyChina )

Author | Ethan (@ethanzhang_web 3)

Original title: Bringing LST to Wall Street: Solana ETF "Staking Plug-in" Operation

On May 20 of this year, the SEC first hit the pause button, requesting 21 Shares, Bitwise, VanEck, and Canary Capital's spot Solana ETF, among others—citing the need for "more time to assess legal and policy issues."

In less than a month, the winds have shifted. On June 11, several informed sources revealed that the SEC has verbally notified all potential issuers that they "must submit a revised S-1 within next week, and comments will be given to you within 30 days," specifically requesting to supplement descriptions of "physical redemption" and "staking"—clearly implying that "staking can be discussed";

Soon, large asset management firms collectively responded: six institutions including Franklin Templeton, Galaxy, Grayscale, VanEck, and Fidelity submitted updated S-1 filings on June 13-14; for the first time, the term "Staked ETP" appeared in SEC documentation, with staking becoming one of the chapter titles.

On June 16, CoinShares joined the fray, becoming the eighth declarant; on June 24, Grayscale wrote a 2.5% management fee in the new S-1, betting on its ability to pass through first with a "high fee + high brand" strategy.

Entering July, the pace of SOL ETF has obviously accelerated:

• July 7 - CoinDesk reports: The SEC sets a hard deadline of "end of July" with the aim of approving the first batch of spot SOL ETFs before October 10;
• July 8 - Fidelity's application has been postponed for 35 days, "waiting for supplementary materials";
• July 28 - Grayscale's application has been postponed again, with the new deadline set for October 10;
• July 29 - Cboe BZX submitted two 19 b-4 filings at once: ① Canary Staked INJ ETF; ② Invesco × Galaxy Spot Solana ETF, clearly indicating a "spot + staking" dual insurance.
• July 31 - ① Jito Labs + Bitwise + Multicoin + VanEck + Solana Institute submitted an open letter to the SEC's Special Working Group on Crypto Assets, officially endorsing "Staked ETP"; ② 21 Shares simultaneously submitted a revised S-1 on the same day, completing the staking terms at the last minute (see SEC filing documents).

So far, within two months, we have gone through "two delays + three rounds of revisions + four new applications" — pulling our core topic for discussion today to the forefront: is it feasible to incorporate Liquid Staking Tokens (LST) into an ETF?

Why: Why are LSTs desperately trying to get into ETFs?

LST List and Status

Note: APR is based on the official data from each LST issuer's website as of August 1, and this data may change in real-time, subject to actual presentation.

Triple Benefits

Passive capital = Long-term lock-up

The larger the ETF scale, the more it can turn LST into a "fund pool that unintentionally reduces positions but continues to earn returns." For Jito and Marinade, this equates to directly adding "tens of billions" of long-term staking volume, allowing the protocol to stabilize commission extraction and naturally boost TVL.

Liquidity Depth Leap

ETFs will continue to trade on the secondary market, while the LST corresponding to the fund shares requires daily subscription and redemption market-making—market makers will simultaneously set up depth for LST/SOL and LST/USDC, providing LST with a thicker base than DeFi pools.

Brand Credit Spillover

Entering the SEC compliance framework means "being endorsed by Wall Street." Once public documents like 10 K and N-CSR start mentioning JitoSOL / mSOL, the due diligence costs for ordinary institutions will plummet, and LST will upgrade from "niche DeFi certificates" to "accountable financial assets."

What is the impact? Breakdown of three main lines

To Solana: Dual Enhancement of Security + Valuation

• Staking rate increase - Based on the 2025 H1 data estimation, if the first batch of spot SOL ETFs raises a total of 5 billion USD, with 80% allocated to LST, approximately 24 million additional staked SOL will be added on-chain (calculated at 167 USD/SOL), raising the staking rate from 66% to nearly 71%, and the network's Nakamoto coefficient will rise simultaneously.
• Valuation anchor "yield" - Staking APR ≈ 7% becomes a segment of the risk-free yield curve in DeFi. The buying price can simplify the discount using "SOL current price / 7%" instead of purely a Beta parabola, which is more friendly to sector valuation.

For other ETFs:

Conclusion: If the SOL LST ETF passes first, the ETH camp will be forced to write the "native staking" clause in more detail, while the BTC ETF will have to continue relying on lowering fees to maintain its attractiveness.

Buyers of ETFs:

• One ticket for three benefits - Spot Beta + over 7% annualized + secondary market liquidity; for accounts with heavy compliance constraints such as Family Offices / pensions, this is the first "high-yield PoS" ticket that can be purchased.
• Taxation & Settlement Friendly — Staking income is often taxed as capital gains rather than operating income within the 40 Act/33 Act structure, which is more favorable than individual on-chain staking.
• Rate Game - The currently disclosed fees range from 2.5% of Grayscale to an expected 0.9% (industry speculation on the VanEck framework). Whoever offers more in returns will attract more orders. The BTC ETF has been pulled to 0.19-0.25%, and the fee war is destined to spread.

Call to action: Is it worth it? What are the risks?

Based on the above data, the probability of passing is approximately 60-70%. At the same time, I believe that in order to pass smoothly, the issuer should at least supplement three types of response plans in the S-1.

Option 1: Discount Circuit Breaker Threshold

It is recommended to set a limit on the deviation of the LST market price from the reference NAV (for example: ± 5%); once the threshold is reached, suspend primary market subscriptions/redeemings, and initiate the "spread adjustment" or cash creation backup process to ensure that the fund shares remain aligned with the underlying asset value.

Plan Two: NAV Calculation and Calibration

At least two independent data sources should be introduced: one on-chain oracle (such as Chainlink) + one compliant custody/market-making quote (such as Coinbase Prime, Cumberland, etc.); it is recommended to update at a 10-second level and disclose redundancy and failover plans to facilitate regulatory assessment of price distortion risks.

Plan Three: Contract Risk Coverage

At the smart contract level, in addition to annual third-party audits, it is advisable to consider purchasing policies from Lloyd’s of London, Nexus Mutual, or similar levels to cover extreme situations such as hacking attacks and staking penalties; and to clearly outline the claims process, coverage limits, and trigger conditions in the prospectus, allowing investors and regulators to have a quantitative expectation of potential losses.

(Note: The above measures are a "reference framework" proposed by the author based on publicly available cases and industry practices. The specific thresholds and technical routes still need to be further communicated and determined between the issuer and the SEC.)

Conclusion

From being "blacklisted" in May to "giving birth" in July, the SEC has completed a posture reversal in just 70 days: it is no longer entangled in "whether to approve or not," but has begun to discuss "how to approve"—for the first time, staking and LST were mentioned in the footnotes of "Crypto ETF 2.0." On the other side of the table, crypto players have told Wall Street with "a public letter + a modified S-1": "Maximize capital efficiency, we understand better than you." The next step depends on whether regulators are willing to let this "high-yield, low-operation" staking game truly enter pensions and 401(k).

If it is really released, it would not only be a victory for Solana, but also a milestone for the PoS narrative moving from on-chain to exchanges, from geeks to institutions.