Bitwise’s Solana ETF Debuts With 7% Yield & Bold Staking Strategy

The first fully spot Solana ETF in the U.S. launched today. The Bitwise Solana Staking ETF (BSOL) offers investors direct exposure to Solana (SOL) while staking 100% of its holdings to generate yield from the Solana network.

Solana is seen by some as a faster, lower-cost alternative to Ethereum and powers a growing ecosystem of decentralized finance and blockchain-based applications.

BSOL carries a 0.20% management fee, which Bitwise is waiving for the first three months on the first $1 billion in assets.

The timing of the launch comes as the SEC remains in limited operation during the government shutdown, creating a brief regulatory window that’s allowed some crypto ETF filings to move forward automatically.

How It Differs From SSK

BSOL isn’t the first Solana ETF listed in the U.S. The $418 million REX–Osprey SOL + Staking ETF (SSK) already trades, but it takes a more indirect route. About 54% of SSK’s portfolio is held in Solana directly, while most of the rest sits in the CoinShares Physical Staked Solana ETP listed in Switzerland.

Through its ownership of the CoinShares ETP, SSK earns staking rewards that accrue into the fund’s NAV rather than being paid out. For the portion of Solana it holds directly, SSK delegates those tokens to third-party validators to stake.

The ETF seeks to stake all of its holdings, though that may not always be possible due to liquidity needs. The fund doesn’t disclose the exact amount staked on its website, but it pays out staking rewards from its directly held Solana in cash distributions. The distribution rate was 5.1% as of September 26.

Bitwise, by contrast, is taking a bolder, more integrated approach. Rather than delegating to third-party validators, it’s running its own. Through a partnership with Helius, a leading Solana infrastructure provider, Bitwise operates a dedicated validator called Bitwise Onchain Solutions, which will stake all of the ETF’s Solana holdings.

Unlike SSK, BSOL will not distribute staking rewards to investors. Instead, Bitwise plans to reinvest those rewards back into the fund, allowing them to compound over time and increase the ETF’s share price. The firm noted that staking rewards may still be treated as taxable income, even though they aren’t paid out directly.

Initial staking yields are expected to be around 7%.

How Staking Works

Staking is central to how proof-of-stake (PoS) blockchains like Solana and Ethereum work.

Instead of relying on miners and energy-intensive computations as in proof-of-work systems like Bitcoin, PoS networks use validators to secure the chain. Validators lock up (or “stake”) tokens as collateral, propose and verify blocks, and earn new tokens and transaction fees in return.

For investors, staking can be seen as the crypto equivalent of earning yield. But it also introduces liquidity constraints since staked assets can’t be immediately withdrawn. In Solana’s case, the unstaking “cooldown” period lasts roughly two days.

Liquidity And Redemption Risk

Because BSOL stakes 100% of its holdings, Bitwise had to build a plan for how the fund will handle redemptions when assets are temporarily locked in the staking process.

According to the fund’s prospectus, if unstaking delays prevent Bitwise from meeting redemptions on the usual T+2 settlement schedule, the sponsor may swap “moderately liquid” Solana (tokens currently in the unstaking cooldown period) for “highly liquid” Solana from a third party.

That transaction would allow the trust to deliver freely transferable SOL to satisfy redemption orders, even while some tokens remain in cooldown. Such trades are expected to occur at a spread, meaning the trust may have to exchange a slightly larger amount of cooling-down Solana to receive an equivalent amount of liquid SOL. 

The document notes that while the impact “is not expected to be significant,” it could slightly reduce the fund’s NAV when used. This structure highlights the operational tightrope involved in running a fully staked ETF, where managers try to maximize yield while still preserving liquidity for investor redemptions.

The Economics Of Staking

At current network conditions, Solana staking yields hover around 7%, compared with roughly 3% on Ethereum. But those returns are partly offset by token inflation. 

Solana’s inflation rate is about 4% per year, with a long-term target of 1.5%, while Ethereum’s supply is currently growing by less than 1% annually thanks to token burns.

Still, for certain investors, staking can make crypto exposure more attractive. It introduces an income component that you don’t find in other digital assets like Bitcoin.

More Crypto ETFs Hit the Market

While BSOL drew the spotlight, it wasn’t the only crypto fund to debut this week. On Tuesday, Canary launched two additional spot crypto ETFs, the Canary Litecoin ETF (LTCC) and the Canary HBAR ETF (HBR), marking the first U.S.-listed funds tied to those assets.

Litecoin, created in 2011, was an early fork of Bitcoin and the second cryptocurrency ever launched. Hedera (HBAR), by contrast, competes more directly with platforms like Ethereum and Solana. It uses a hashgraph structure instead of a traditional blockchain and operates under a more centralized governance model.

Both coins are relatively small compared with the market’s largest names, with market caps of roughly $8 billion each versus about $100 billion for Solana, $500 billion for Ethereum, and $2.2 trillion for Bitcoin.

The arrival of these ETFs may be just the beginning. A wave of new crypto ETFs is expected to follow under the SEC’s recently approved generic listing standards, which make it easier for exchanges to bring crypto ETFs to market without lengthy case-by-case approvals.