VanEck's AVAX ETF to Stake 70% Holdings via Coinbase, Boost Yield for Investors

VanEck has revised its AVAX Spot ETF application (VAVX) to integrate a staking rewards mechanism, allocating 70% of its AVAX holdings to generate yield for investors. The fund will utilize Coinbase Crypto Services as its primary staking provider, which will retain 4% of the staking rewards as service fees. Staking rewards will be included in the fund's net asset value (NAV) according to data.

The updated proposal specifies that AVAX will be held in secure custody with Anchorage Digital and Coinbase Custody, both of which store tokens offline in cold wallets for added security according to reports. VanEck has structured the fund to track the AVAX price via the MarketVector Avalanche Benchmark Rate index, which aggregates data from major exchanges.

The move reflects a growing trend among crypto-linked ETFs to incorporate yield-generating mechanisms while maintaining low management fees. VanEck has set a 0.30% management fee, positioning it competitively against rival products. The fund is expected to trade on Nasdaq under the ticker symbol VAVX, pending approval according to market analysis.

How Markets Reacted

The announcement has already had a positive effect on AVAX, which surged more than 2% in response to the news. Market participants interpreted the proposal as a sign of rising institutional confidence in Avalanche, particularly with Coinbase Crypto Services being named as the staking provider according to market reports. The move has also increased attention on AVAX derivatives, with open interest rising 0.70% to $471.41 million, indicating a higher level of leveraged participation.

Despite the price rally, on-chain data showed that AVAX's 24-hour trading volume dropped by 46.63% to $289.18 million. Nevertheless, the token has held its strength, trading at $12.22 as of the latest data. Long positioning remains dominant across major exchanges, with a long/short ratio of 1.56 on Binance.

What This Means for Investors

VanEck's revised ETF structure introduces a new avenue for investors to gain exposure to AVAX while earning staking rewards. By allocating 70% of its holdings to staking, the fund aims to enhance returns beyond price appreciation. The inclusion of multiple liquid staking providers—Benqi Finance, Hypha, and Yield Yak—also provides flexibility for investors who want to maintain the utility of their staked assets according to market analysis.

The proposal has broader implications for the crypto market, as it demonstrates how institutional players are adapting to regulatory frameworks to offer innovative products. The SEC's recent approval of generic ETF listing standards has enabled firms like VanEck to bring structured, compliant products to market according to regulatory filings. Investors and market participants are now watching closely to see how the fund performs once it is approved and listed on Nasdaq.