What is the Canary Staked INJ ETF?
The Canary Staked INJ ETF ($INJC) is a proposed exchange-traded product designed to provide investors with exposure to the price of Injective (INJ), the native token of the Injective Network, through a traditional brokerage account.
In addition to holding INJ, the Trust intends to participate in a staking program administered by the Sponsor, in which staking rewards would be earned through the validation of transactions on the Injective Network’s proof-of-stake blockchain.¹
What is INJ?
INJ is the native token of the Injective Network, a specialized Layer-1 blockchain built for financial applications.
The network uses a custom implementation of the Tendermint proof-of-stake consensus framework, a Byzantine Fault Tolerant algorithm designed to enable secure and fast transaction finality. INJ serves several functions in the ecosystem: securing the network through staking, enabling governance participation, and acting as the primary medium of exchange for transaction fees, trading fees, and other on-chain operations.¹
What does “staked” mean?
Staking is the process of committing eligible digital assets to help support the operation and security of certain blockchain networks.
In return, participants may receive staking rewards paid by the network.
Who would run the Trust’s staking program?
The Staking Program would be carried out by the Sponsor, who is responsible for selecting one or more Staking Providers that operate validator nodes for the Injective Network.
The Trust itself would not engage in staking activities, including the operation of a validator node, and would not have any direct contractual relationship with the Staking Providers. The Staking Provider exercises no discretion as to how much of the Trust’s INJ is staked or when. The Custodian would maintain exclusive possession and control of the private keys associated with any staked INJ at all times.¹
How would the ETF obtain exposure to INJ?
The Trust intends to hold actual INJ rather than using futures contracts or derivatives. The Trust would not use leverage, and the Trust’s assets — including staked assets — would not be loaned, pledged, or used as collateral.
The value of the Shares is expected to reflect the value of the Trust’s INJ holdings, less fees and expenses.¹
Would the ETF stake all of its INJ?
No. The Trust expects to stake only a portion of its INJ holdings. A portion of assets may remain unstaked to help facilitate creations, redemptions, liquidity needs, and other operational requirements.¹
How would staking rewards be treated?
In consideration for any staking activity in which the Trust engages, the Trust would receive a portion of the staking rewards generated by the Staking Program. Those rewards would be subject to Staking Fees shared among the Staking Provider, the Sponsor, and the Custodian, which reduce the amount of INJ the Trust receives.
The Staking Provider would distribute earned staking rewards to the Trust’s wallets at the Custodian on a periodic basis, generally coinciding with 4:00 p.m. E.T. on each business day the Exchange is open. Accrued staking rewards would be included in the Trust’s daily NAV calculation. Except for INJ reserved by the Sponsor, staking rewards would be restaked pursuant to the Staking Program.
The Trust does not guarantee that staking rewards will be earned or maintained at any particular level.¹
Would investors receive staking rewards directly?
No. Shareholders would own shares of the ETF, not the underlying INJ.
Any staking rewards earned by the Trust would generally be reflected through the value of the Trust’s assets rather than being distributed directly to shareholders. The Trust does not intend to distribute proceeds from the Staking Program.¹
What is slashing, and does it apply here?
Slashing is an automatic penalty imposed by certain networks when a validator misbehaves — for example, by signing two conflicting versions of the chain or being offline for an extended period.
The Injective Network currently implements slashing, meaning staked INJ is subject to these penalties. While the Sponsor does not expect the activities of the Staking Provider to result in slashing penalties, there can be no guarantee that slashing will not occur. The Custodian’s and the Staking Provider’s potential liability to the Trust is limited, and there can be no guarantee that the Trust would recover any staked assets, or their value, if subject to slashing or other penalties.¹
How would the Trust manage liquidity for staked INJ?
On the Injective Network, bonding is instant and delegated tokens begin earning rewards in the next block. Unbonding, however, requires 21 days, during which INJ does not earn rewards and cannot be transferred or redelegated.
The Sponsor would carry out the Staking Program in accordance with its Liquidity Risk Management Policy, which is designed to ensure the Trust maintains sufficient liquidity to fulfill redemption orders on a timely basis. The policy assesses the protocol’s native unbonding period, sources of credit, sources of tokens, and other liquidity considerations against the settlement period for redemptions, and permits the Trust to maintain credit facilities as backup liquidity. The complete Liquidity Risk Management Policy would be available on the Trust’s website.¹
How would the Trust’s NAV be determined?
The Trust would establish its net asset value (NAV) by reference to the CoinDesk Injective USD CCIXber 60m New York Rate, calculated by CoinDesk Indices based on a 60-minute time-weighted average price aggregated from executed trade flow across major INJ trading platforms. The Pricing Benchmark is calculated as of 4:00 p.m. ET.¹
Would buying the ETF mean I own INJ?
No. Investors would own shares of the ETF. The Trust would own the underlying INJ on behalf of shareholders.
How would the Trust’s INJ be stored?
According to the registration statement, the Trust’s INJ would be held by a qualified digital asset custodian using institutional custody solutions. BitGo Trust Company, Inc. would serve as the Trust’s custodian, providing safekeeping through a multi-layer cold storage security platform designed to keep digital assets offline.
The Custodian is not insured by the Federal Deposit Insurance Corporation (FDIC) but carries insurance provided by private insurance carriers, which is shared among all of the Custodian’s customers, is not specific to the Trust, and may not be sufficient to protect the Trust from all possible losses.¹
Could I transfer my ETF shares to a crypto wallet?
No. ETF shares trade through brokerage accounts and cannot be transferred to blockchain wallets.
Could I redeem ETF shares for INJ?
No. Retail investors generally buy and sell ETF shares on an exchange.
Shares are not redeemable directly for INJ by individual investors.
How would the ETF’s price relate to the price of INJ?
The Trust is designed to track the value of its INJ holdings, less fees and expenses.
Like other exchange-traded products, market prices may vary slightly from NAV during the trading day.
Would shareholders benefit from a fork or airdrop?
No. Shareholders should not expect to receive the economic benefit of any fork of the Injective Network or any asset airdropped to holders of INJ. The Sponsor would cause the Trust to irrevocably abandon any such digital asset.¹
What are the primary risks?
As described in the registration statement, risks include:
- Changes in the market price of INJ
- Digital asset market volatility
- Blockchain and network risks
- Custody risks
- Regulatory developments
- Risks associated with staking, including slashing penalties and the 21-day unbonding period
- Operational risks
Investors should review the prospectus carefully before investing. For a more comprehensive list of the Fund’s risks, please view the prospectus. Read the prospectus carefully before investing.¹
Is the ETF guaranteed to earn staking rewards?
No. Staking rewards can vary over time and may be affected by network conditions, validator performance, regulatory developments, or other operational factors. There is no guarantee that staking rewards will continue or achieve any particular level.¹
¹ https://www.sec.gov/Archives/edgar/data/2073616/000199937125020561/inj-s1a_121725.htm
Disclosures and Risk
This information must be preceded or accompanied by a prospectus for the Canary Capital ETFs. Click the following links to view a prospectus: HBR, LTCC, SUIS, SOLC, INJS, XRPC, and INJC.
An investment is not suitable for all investors, may be deemed speculative and is not intended as a complete investment program. An investment should be considered only by persons who can bear the risk of total loss associated with an investment. An investment in any Canary Capital product is not a direct investment in any cryptocurrency.
Each Trust is not an investment company registered under the Investment Company Act of 1940 (the “1940 Act”) and is not a commodity pool for purposes of the Commodity Exchange Act. Shares of each Trust are not subject to the same regulatory requirements as mutual funds or ETFs registered under the 1940 Act. Each Trust holds a single digital asset and is not diversified.
Carefully consider each Trust’s investment objective, risk factors, and charges and expenses before investing. This and other information can be found in each Trust’s prospectus, which may be obtained by visiting canaryetfs.com. Read the prospectus carefully before investing.
This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change.
Shares of the Trusts are bought and sold at market price (not NAV) and are not individually redeemed from a Trust. Market price returns are based on the midpoint of the bid-ask spread and do not represent the returns an investor would receive if shares were traded at other times. Any applicable brokerage commissions will reduce returns.
Canary Capital does not store, hold, or maintain custody of any Trust’s digital assets, but instead has entered into custodial arrangements on behalf of each Trust with one or more third- party custodians to facilitate the security of each Trust’s digital assets. The custodian controls and secures each Trust’s digital asset account, a segregated custody account to store private keys, which allow for the transfer of ownership or control of the digital asset, on each Trust’s behalf. If a custodian resigns or is removed by Canary Capital or otherwise, without replacement, it could trigger early termination of the applicable Trust.
Each Trust relies on third-party service providers to perform certain functions essential to the affairs of the Trust, and the replacement of such service providers could pose a challenge to the safekeeping of the Trust’s digital assets and to the operations of the Trust.
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Digital assets are held by third-party custodians, which may include BitGo Trust Company LLC and Gemini Trust Company LLC; U.S. Bank National Association serves as cash custodian and U.S. Bank Global Trust Services serves as administrator.
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