VanEck: Why are we applying for a SOL ETF?

Original authors: Matthew Sigel, VanEck

Original compilation: Ismay, BlockBeast

Editor's note: SOL has long been anticipated to become the third ETF after Bitcoin and Ethereum. However, the SEC has classified SOL as a security, hindering its ETF progress. Now, VanEck has submitted the first application for a Solana ETF, which is an exciting development and marks an important first step towards approval. This move not only demonstrates market confidence in Solana but also signals further development of the cryptocurrency ecosystem. Matthew, the head of digital asset research at VanEck, elaborates on why SOL has the potential to become an important digital commodity and VanEck's outlook on its future.

Here is the original content:

I am pleased to announce that VanEck has just submitted the first application for a Solana ETF in the United States, and here are some of our views on why we believe SOL is a commodity.

Why are we applying for this ETF?

As a competitor to Ethereum, Solana is an open-source blockchain software designed to handle a variety of applications, including payments, trading, gaming, and social interactions. The Solana blockchain operates as a single global state machine without sharding or second-layer solutions, and its unique combination of scalability, speed, and low cost may provide a better user experience for many use cases.

By processing thousands of transactions per second at extremely low fees and employing an advanced security mechanism that combines proof-of-history and proof-of-stake, we believe Solana stands out as a powerful and accessible blockchain software. We think this combination of high throughput, low fees, strong security, and a robust community atmosphere makes Solana an attractive exchange-traded fund option, providing investors with the opportunity to access a versatile and innovative open-source ecosystem.

Why do we believe SOL is a commodity similar to Bitcoin and Ethereum?

We believe the native token SOL functions similarly to other digital commodities like Bitcoin and Ethereum. It is used to pay for transaction fees and computational services on the blockchain. Just like ETH on the Ethereum network, SOL can be traded on digital asset platforms or used for peer-to-peer transactions.

The wide range of applications and services supported by the Solana ecosystem, from DeFi to NFTs, underscores the utility and value of SOL as a digital commodity. No single intermediary or entity operates or controls the Solana network, a principle known as decentralization. The transaction validation and recording infrastructure is maintained by a diverse user base composed of numerous independent validators from around the world. These validators are responsible for processing transactions and securing the network, ensuring that no single entity can monopolize the system.

The decentralized nature, high utility, and economic viability of SOL align with the characteristics of other established digital commodities, reinforcing our belief in SOL as a valuable commodity that can provide use cases for investors, developers, and entrepreneurs seeking alternatives to the duopoly of app stores.