Grayscale formalized a mandatory minimum cadence for converting staking rewards from three cryptocurrency exchange-traded products into cash and distributing net proceeds to shareholders. The amendments establish a contractual floor for how staking income—additional tokens earned through network validation participation—is monetized and passed through to investors, providing greater predictability than discretionary distribution timing.

Trust amendments executed on August 6 for the Grayscale Ethereum Staking ETF (ETHE), Grayscale Solana Staking ETF (GSOL), and Grayscale Avalanche Staking ETF (GAVA) require each product to convert "Staking Consideration" into cash no less frequently than quarterly. Net proceeds must be distributed to shareholders promptly after applicable fees and trust expenses are deducted.

According to Form 8-K filings submitted on August 7, the three trusts currently intend to make distributions on a monthly basis, though the binding minimum floor remains quarterly.

Recurring Sell Flow for Reward Tokens

As the trusts receive staking rewards, they are required to periodically sell the earned consideration and pass the resulting cash to investors. This structure creates a recurring market sell flow for reward tokens. However, it does not establish scheduled liquidation of the trusts' principal holdings of $ETH, $SOL, or $AVAX. The distribution clauses apply specifically to staking consideration earned by the products. Other disclosures continue to permit token sales for separate purposes, including redemptions, fees, and expenses.

The amendments mandate that reward tokens will be converted to cash but do not specify the volume to be sold in any given future period. Because each trust stakes assets on a different proof-of-stake network with distinct reward rates, validator economics, and lockup mechanics, the realized sell flow from each product will vary independently based on protocol-level factors.

Staked Asset Holdings as of June 30

As of June 30, ETHE reported $1.22 billion in total assets, with $999.96 million in staked $ETH, representing approximately 81.7% of its total assets. GSOL reported $101.16 million in assets and $101.05 million in staked $SOL, or roughly 99.9%. GAVA reported $4.27 million in assets and $3.45 million in staked $AVAX, approximately 80.9%.

The reports do not disclose current annualized reward rates. Future sales and distributions will depend on rewards actually received, the amount staked, protocol-level reward rates, token prices, and applicable deductions.

Fee Structures Across the Three Products

ETHE charges a 2.5% annual Sponsor fee, while its Sponsor staking fee and validator fees together accounted for 23% of gross rewards as of June 30. GAVA disclosed a 0.35% annual Sponsor fee and the same 23% aggregate reward deduction. GSOL disclosed a 0.19% annual Sponsor fee and a 7% aggregate staking-related deduction covering both Sponsor and validator fees.

The annual Sponsor fees and the reward deductions are calculated on different bases and should not be treated as additive percentages.

ETHE Distribution Precedent

ETHE provides an operating precedent, though not a forecast. The fund paid approximately $9.4 million, or $0.083178 per share, on January 6, following the sale of staking rewards earned between October 6 and December 31, 2025. Differences in asset levels, staking participation, fees, reward rates, and token prices make it unreliable to extrapolate that payment across all three products. Upcoming distributions from GSOL and GAVA will provide the first concrete per-share benchmarks for those products' realized staking economics under the new framework.

Tax Considerations for Shareholders

While the cash conversion planned by Grayscale may simplify what shareholders receive, tax disclosures from ETHE and GSOL indicate that the underlying activity can produce multiple potential tax consequences.

Assuming grantor-trust treatment applies, a U.S. holder is generally treated as receiving a pro rata share of staking income at the time the trust earns it. A subsequent trust sale of reward tokens to fund a cash distribution may also allocate a pro rata capital gain or loss to the holder. Under the treatment described in the filings, the receipt of cash itself should not constitute an additional taxable event.

The disclosures caution that the grantor-trust position is not guaranteed. They also flag potential unrelated business taxable income (UBTI) for certain tax-exempt holders, as well as unresolved sourcing and withholding questions for non-U.S. investors.

The amendments effectively create a recurring operational cycle: earn reward tokens, sell them, and distribute net cash. The resulting market sell flow will depend on realized rewards and deductions, not on headline asset totals alone.