SOLZ: Structurally Inefficient Given The Emergence Of Spot Solana ETFs

Summary The Volatility Shares Solana ETF is rated 'Sell' due to structural disadvantages versus spot Solana ETFs. SOLZ's reliance on futures contracts leads to tracking inefficiencies, a higher expense ratio (0.95%), and inferior yield compared to spot-based staking ETFs. Spot Solana ETFs now offer direct exposure, higher staking yields (~6.2%), and lower fees, making SOLZ increasingly obsolete for long-term investors. While SOLZ maintains liquidity and accessibility, capital is likely to migrate to more efficient spot funds as the market matures. It has been a little over one year since the first futures-based exchange-traded funds tied to the price of Solana came to market, with the Volatility Shares Solana ETF ( SOLZ ) beginning to trade on March 20 th , 2025. Unlike spot ETFs [which at the time of the fund’s release had not yet received regulatory approval], the Volatility Shares ETF tracks the price of Solana through futures contracts rather than holding SOL-USD directly. Similar to other cryptocurrency spot-based exchange-traded funds, the release of futures-based ETFs served as a precursor for the eventual approval of spot Solana ETFs near the end of 2025. With that said, given the emergence of spot ETFs, the use case for funds like SOLZ has become limited. I argue that, due to the fund’s higher expense ratio, lack of access to staking yield, and structural inefficiencies, investors should largely steer clear of SOLZ. While I are generally optimistic about the prospects of the underlying cryptocurrency, I assign a “Sell” rating to the Volatility Shares Solana ETF. In the current bear market, I acknowledge that, despite long-term fundamentals remaining intact for the underlying token, near-term price action may continue to face headwinds. Given the current risk-off market environment, I maintain hold ratings on both spot Solana ETFs and the underlying asset. Unique Value Proposition of Solana Futures-Based ETF has Eroded With Emergence of Spot ETFs SOLZ does not directly hold Solana tokens. Instead, according to the issuer, “[the fund uses] financial derivatives [primarily futures contracts and potentially swap agreements] to gain exposure to Solana's price movements.” According to the fund’s prospectus , “SOLZ seeks long-term capital appreciation by actively managing positions in Solana futures traded on CFTC-regulated exchanges.” As a result, investors' returns are tied to the performance of the futures contracts rather than the underlying Solana itself. Given the greater efficiency of spot ETFs, it is my opinion that the qualities of SOLZ have become structurally disadvantaged in the current environment. Volatility Shares acknowledges that the fund aims to provide investors 1X exposure to the price movements of Solana while avoiding many of the difficulties/complexities of direct crypto ownership. However, the question becomes, in the current market, why would an investor choose a futures-based fund rather than a spot-based fund? SOLZ’s structural problems stem from its reliance on derivatives rather than holding spot Solana, which has resulted in deviations in performance over time. In particular, losses can occur from selling lower-priced expiring contracts and buying higher-priced, longer-dated ones. Over time, this can create a persistent drag on returns. Additionally, a portion of the portfolio must remain in cash and treasuries as collateral, which limits the full participation in Solana’s upside price appreciation. When combined with higher fees and price tracking inefficiencies, these structural factors can lead to a return profile that fails to match that of the spot-based ETFs. These inefficiencies are structural rather than cyclical and therefore unlikely to improve over time. The chart below shows that during periods of higher market volatility, SOLZ’s performance has deviated from that of both GSOL and SOL-USD. For example, performance between SOLZ and GSOL differed by approximately 34 percentage points in September 2025. Price Return Comparison (Source: Seeking Alpha) Another structural disadvantage comes in the form of SOLZ’s dividend. With a current dividend yield of 3.30%, this is derived from the cash and treasuries held by the fund rather than the underlying economics of the Solana network itself. In contrast, spot Solana ETFs that offer staking capabilities can generate yield directly from on-chain activity. Notably, given current staking yields ( ~6.2% ), the potential income derived from staking is higher than the dividend provided by SOLZ. This makes SOLZ’s income stream both less competitive and structurally disconnected from the underlying asset. While staking fees vary significantly across funds (see table below), current net yields for spot ETFs are still significantly greater than SOLZ’s current dividend yield. As an example, the Franklin Solana ETF ( SOEZ ) currently offers a net yield of 5.42%. ETF Staking Fees BSOL 6% of Solana rewards FSOL 15% of Solana rewards VSOL 0.28% of total staked Solana GSOL 23% of Solana rewards (Source: etfdb) One major drawback to the Volatility Shares Solana ETF is the expense ratio of 0.95%. When compared to spot ETFs, only the REX-Osprey SOL + Staking ETF ( SSK ) has a worse fee structure. As shown in the chart below, the Franklin Solana ETF ((SOEZ)) and the Bitwise Solana Staking ETF ((BSOL)) are currently the most affordable options for investors. * Funds currently still within fee waiver period (Source: Individual fund websites, compiled by analyst) Additionally, as I have discussed in previous crypto ETF articles, AUM remains critically important given the burgeoning and highly competitive new asset class. By a wide margin, BSOL remains the spot Solana ETF leader, with just under $600 million in assets. That said, SOLZ maintains a respectable AUM of $101.20 million. However, as crypto continues to navigate the current risk-off environment, I expect capital to likely migrate from futures-based ETFs like SOLZ to spot funds like BSOL, FSOL, and SOEZ as they prove to be more efficient vehicles to invest in the underlying crypto. (Source: Seeking Alpha, compiled by analyst) Given the introduction of spot Solana ETFs, the original purpose of SOLZ has largely been eliminated. Now, investors can invest directly from their brokerage accounts in funds that own the underlying asset. As a result, SOLZ now represents a structurally inferior and increasingly unnecessary option for investors seeking Solana exposure. Risks to Underlying Thesis Despite the structural drawbacks I have covered in this article, SOLZ may retain relevance for certain market participants. For investors who are comfortable with exposure via derivatives, its accessibility via traditional brokerage accounts continues to provide a frictionless way to gain exposure to Solana’s price movements. SOLZ maintains respectable liquidity and AUM, supporting efficient trading and minimizing execution risk. Short-term traders or individuals seeking exposure without the complexities of spot ownership or staking may choose the futures-based fund over other available options. Lastly, the fund’s collateral-driven yield derived from cash and treasuries could become relatively more attractive if staking yields were to decline and interest rates were to rise. This could potentially narrow the advantage currently held by spot-based staking ETFs. While I view SOLZ as structurally disadvantaged for long-term investors, it may still be appropriate in more tactical/constrained use cases. Solana Network The Solana network continues to be one of the leading L1s, with strong underlying on-chain metrics. Stablecoin supply remains near all-time highs of $15 billion, representative of a strong liquidity base. Likewise, TVL remains significantly elevated when compared to 2023 lows, currently sitting at approximately $6.4 billion. Despite the current risk-off environment, Solana has retained a strong base of users and network activity, representative of its real economic value. With a demonstrated history of throughput advantages and clear use cases across DeFi, stablecoins, and RWAs, it is my opinion that it is likely to maintain its position among the leading cryptocurrencies. However, as I have seen in the past, price performance and network strength do not always move in tandem. In the short term, risk remains elevated. TVL (Source: DefiLlama) While long-term fundamentals remain intact for the underlying token, near-term price action may continue to face headwinds. In the current market environment, the investment case for Solana remains mixed. While the network continues to show strong underlying activity, fundamentals such as active number of addresses and TVL have yet to translate into meaningful upward price movement amid the current risk-off backdrop. Given that crypto tends to underperform during periods of tightening financial conditions and reduced liquidity, I continue to remain cautious on the underlying crypto and spot ETFs. Final Takeaway While the Solana network continues to demonstrate strong fundamentals and long-term potential, SOLZ is no longer the best way for long-term investors to capture that upside. The fund’s reliance on futures introduces structural complications such as tracking inefficiencies and limited yield that is disconnected from the underlying network. When combined with a higher expense ratio, I view SOLZ’s return profile as being inherently less efficient relative to spot-based alternatives. As the market continues to mature and capital flows toward more efficient structures, spot ETFs seem increasingly better suited for long-term investors. While I am generally optimistic about the long-term prospects of the underlying cryptocurrency, I assign a “Sell” rating to SOLZ.