3iQ Seeks Approval for North America's First Solana ETP

3iQ has filed for a Solana (SOL) exchange-traded product (ETP) listing on Canada’s Toronto Stock Exchange (TSE).

Digital asset manager 3iQ has filed for a Solana ETP listing on North America's Toronto Stock Exchange (TSE). Coinbase Custody and Tetra Trust will serve as custodians for the ETP. The filing follows Solana's rising popularity, which is very clear in its DEX volume growth and increasing active addresses. Additionally, Solana's ecosystem is expanding more into gaming, with Mirror World Labs securing $12 million for its Sonic gaming rollup to improve Solana's gaming infrastructure.

3iQ Wants to List Solana ETP on Canadian Market

Digital asset manager 3iQ has filed for a Solana (SOL) exchange-traded product (ETP) listing on Canada’s Toronto Stock Exchange (TSE). If approved, it will be the first Solana ETP listed in North America. 

The firm announced on Jun. 20 that it submitted a preliminary prospectus for The Solana Fund (QSOL) in Canada. The preliminary prospectus was filed with securities regulatory authorities in all Canadian provinces and territories except Quebec. 

QSOL could provide exposure to the digital currency SOL and track its daily price movements in U.S. dollars. Additionally, holders of 3iQ’s Solana ETP may benefit from native SOL staking yields, which is estimated to be around 6-8%. Coinbase Custody and Tetra Trust will serve as custodians for the fund, with Coinbase Custody providing exclusive institutional staking infrastructure as well. 

3iQ’s other main crypto products listed on the TSE include the Bitcoin ETF (BTCQ) and the Ether Staking ETF (ETHQ), which have net assets of approximately $233 million and $38.7 million, respectively. The firm also offers The Bitcoin Fund (QBTC) and The Ether Fund (QETH). 

Canadian securities regulators approved the world’s first spot Bitcoin ETFs in February of 2021, followed by spot Ether products two months later. Bloomberg ETF analyst James Seyffart pointed out that Canada introduced spot Bitcoin and Ethereum ETFs before the U.S. even had futures ETFs for these assets. 

Although Franklin Templeton and other U.S. asset managers have praised the Solana network, none have announced any plans to pursue a spot Solana ETF in the U.S. yet.

What are ETFs?

ETFs are investment vehicles that are very similar to mutual funds. They are designed to track the price of an asset or a basket of assets, like gold or the S&P 500 index. They essentially offer investors a more convenient way to diversify their portfolios by providing access to a wide range of assets with a single purchase. 

ETFs are listed on major exchanges like the New York Stock Exchange, Nasdaq, and the Shanghai Stock Exchange, and they can be bought and sold like individual stocks through traditional brokerage accounts. This ability to trade throughout the day is a key difference from mutual funds, which are typically priced only once a day after the markets close.

ETFs dynamically track the price of their underlying assets through continuous buying and selling to maintain alignment with the component parts' prices. This process makes sure that the share price of an ETF closely follows the performance of the assets it represents. Unlike mutual funds, which have a net asset value (NAV) calculated at the end of each trading day, ETFs experience price fluctuations throughout the trading hours, providing more flexibility for investors.

Both ETFs and mutual funds serve as wrappers that encompass multiple individual securities, making them attractive options for retail investors who are looking to diversify their investments. By buying an ETF or mutual fund, investors can gain exposure to a broad range of stocks, bonds, or other types of investments, thereby spreading risk and potentially boosting returns.

Solana’s DEX Volume Soars

Solana has also been turning heads because, in May, more than 60% of the incremental volume in decentralized exchanges (DEXs) was recorded on the Solana blockchain. According to Pantera Capital, Solana’s monolithic architecture is behind this growth. Pantera even compared it to Apple's macOS, integrating hardware and software for superior performance. 

Solana vs Etheren DEX volume (Source: Pantera Capital)

Solana’s share of DEX volume has surged from 0% in early 2021 to 24% by May of 2024. Pantera also pointed out that the network’s active addresses increased from 14,000 in October of 2020 to almost 1.3 million by May 2024. As a result of this, there has been an explosive rise in priority fees on the network, growing from less than $100,000 per month in mid-2023 to over $60 million in March 2024.

The Solana blockchain has also become a very popular choice for developers of meme coins and decentralized infrastructure projects. Since January, Solana has seen a growing volume of new tokens, easily outpacing other chains like BNB Smart Chain, Ethereum, and Polygon. In fact, by May 2024, Solana accounted for about 85% of all new tokens appearing on DEXs, up from 50% a year ago. 

The price of Solana's SOL token has also been performing well as its price has risen by more than 680% in the past year alone. At press time, SOL was worth about $132.21 after its price slipped by about 4% throughout the past day of trading, according to CoinMarketCap.

Despite its growth, Solana has faced some challenges, including network outages. The last outage happened on  Feb. 9, and resulted in nearly five hours of downtime. However, Solana’s upcoming Firedancer upgrade is expected to tackle this issue by improving the network’s resilience and scalability. The full version of this upgrade is slated for 2025.

Solana Gaming Studio Raises $12M

Solana gaming studio Mirror World Labs also recently secured $12 million in its inaugural Series A funding round that was led by Bitkraft, Galaxy Interactive, Big Brain Holdings, and others. The funds will go towards the development of its gaming rollup, Sonic. 

Chris Zhu, CEO and founder of Sonic, stated that the company has supported hundreds of Web3 games over the past two years, mainly focusing on Solana. Zhu believes that Sonic SVM will be crucial for the upcoming Solana gaming summer, and will help thousands of games in launching and reaching the market.

The raised capital will accelerate the Sonic protocol, introducing features like sandbox environments, customizable gaming primitives, and extensible data types. Sonic wants to onboard new developers to the Solana gaming ecosystem and help existing game producers in utilizing the Sonic SVM and HyperGrid Framework. 

Despite Solana's success in the meme coin and decentralized application markets, its gaming sector has lagged a bit. Developers believe the Sonic protocol could help deploy Solana Virtual Machine (SVM) chains to support GameFi projects. 

Sonic was launched on Mar. 29, and has been deployed to 50 gaming clients as initial distribution nodes. Games like Mahjong Meta, Matr1x Fire, and Seraph/ActozSoft saw over 200,000 traffic and transaction engagements after incorporating the Mirror World SDK.

Sonic’s Vision

In a recent interview, Chris Zhu stated that despite Solana's rising popularity, developers still face many infrastructure challenges in building games on the blockchain. Zhu also pointed out the lack of features like cross-chain swaps and crypto on- and off-ramps, which complicate the development of Solana-based games. Now, Mirror World Labs plans to address these issues with the $12 million it raised to improve its gaming rollup, Sonic.

Sonic will enhance Solana's gaming capabilities by enabling atomic interoperability through the HyperGrid Framework. This allows liquidity to stay on the mainnet while processing game logic on Sonic. Mirror World targets a transaction settlement capacity of 12 million transactions per second on Sonic and HyperGrid, which is essential for real-time multiplayer gaming transactions.

Currently, Sonic is the only software development kit (SDK) on Solana, with competitors like Eclipse building on Ethereum.