VanEck’s Decision to Terminate EFUT
VanEck has announced its decision to terminate the Ethereum Strategy ETF (EFUT) by September 16, 2024. The liquidation process is expected to be completed by September 23. EFUT, launched in October 2023, has struggled with limited asset growth and underperformance compared to VanEck’s more successful spot Ethereum ETF (ETHV).
Reasons Behind the Liquidation
VanEck’s decision to liquidate EFUT aligns with its ongoing evaluation of various factors such as performance, liquidity, and investor interest. EFUT shareholders will receive cash payments based on the net asset value of their holdings once the ETF is closed and liquidated.
Challenges Faced by Ethereum
According to VanEck’s August 2024 Crypto Monthly Recap, Ethereum has faced several obstacles impacting its price and performance. Notably, the proportion of decentralized exchange trading volume attributed to Ethereum has significantly declined, from 42% in 2022 to 29% in 2024.
- **Reduction in Network Revenue:** Decreased earnings from Ethereum’s network operations.
- **Policy Changes:** Strategic decisions affecting Ethereum’s market position.
- **Increased Competition:** Rival blockchains like Solana, Sui, and Aptos with superior transaction processing capabilities.
Moreover, the rise of layer-2 networks has impacted Ethereum’s layer-1 revenue, with a drastic 99% decrease in network fees following the Dencun upgrade in March 2024.
VanEck’s Continued Commitment to Digital Assets
Despite the challenges faced by Ethereum, VanEck remains committed to the digital assets space. The firm will continue to offer other cryptocurrency-related products, including the Digital Assets Mining ETF (DAM) and the Bitcoin Strategy ETF (XBTF). This decision highlights VanEck’s ongoing involvement and investment in the evolving digital asset landscape.
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