Summary Bitwise Solana ETF and Grayscale Solana Trust now offer spot ETF exposure to Solana in the US market. BSOL stands out with a lower expense ratio (0.2% with a fee waiver) and a higher staking ratio compared to GSOL's 0.35% fee. Both ETFs provide easier, tax-advantaged Solana access for IRA accounts, with BSOL offering superior cost efficiency for most investors. I initiate BSOL with a 'buy' rating, citing its lower fees, higher staking ratio, and better long-term suitability over GSOL and other alternatives. Despite a government shutdown in the United States that was widely believed to put a pause on any new digital asset ETFs in the American market, the SEC is indeed approving new crypto ETFs and existing closed-end fund conversions. One of the assets that is getting the ETF wrapper in the US is Solana ( SOL-USD ). On October 29th, the Grayscale Solana Trust ( GSOL ) will begin trading as a spot ETF rather than as a closed-end fund. This comes one day after the Bitwise Solana ETF ( BSOL ) began trading as well. In this article, I'm not going to get into the investment thesis for Solana other than disclosing that I am still personally long SOL and believe it's one of the better opportunities in the digital asset space. Rather, in this piece we'll explore a comparison between GSOL, BSOL, and a third-party option that I've personally used as well. Brief Recap Mike Fay GSOL Coverage (Seeking Alpha) For the benefit of clarity, I've covered GSOL a handful of times throughout the last several years. I've generally always called the fund a 'sell' mainly because it has historically traded at a significant premium to the net asset value of the fund's underlying shares. Now that the structure of the fund has changed, it's time to update my view on GSOL and compare it to a notable peer fund in BSOL. Grayscale vs. Bitwise Solana Funds As spot ETFs, both of these funds are designed for simple, inexpensive exposure to Solana without needing private keys, DeFi competency, or any on-chain activity at the user end. More importantly, GSOL's days of trading at sizable premiums (or discounts) to NAV should be over. Unlike the other two products in the table below, BSOL and GSOL are 100% weighted to spot Solana. The first thing that will likely matter when choosing between GSOL, BSOL, and alternative Solana-based financial products is the expense ratio of the funds: Solana Exposure Expense Ratio Market Cap Structure Yield? Solana ETF ( SOLZ ) 0.95% $229.6m Futures Fund No REX Shares-Osprey SOL ( SSK ) 0.75% $413m C-corp Yes GSOL 0.35% $102.7m Spot ETF Yes BSOL 0.20% $288.9m Spot ETF Yes Source: Seeking Alpha, Grayscale, Bitwise Up until this point, Grayscale had always charged 2.5% for its GSOL product. That expense ratio is now down to just 0.35%. This is a great sign in my view and an indication that Grayscale is finally willing to compete in this market from a fee standpoint. Still, Bitwise is charging just 0.2% on a gross expense ratio and 0% for the duration of its introductory fee waiver. That waiver will last for either three months or until the fund reaches $1 billion in assets under management. At $289 million in AUM, there is still a bit of a runway for BSOL buyers before fees actually begin to kick in. As you can see in the table above, each fund is more competitive than the non-spot options in the market. From where I sit, SOLZ and SSK are likely losers here just on the management fee alone. But it's presumably worse for the Volatility Shares Solana ETF ( SOLZ ) because it is the only product of the four that doesn't offer yield from staking. This brings us to the next important metric: what can investors expect as a staking return from these funds? Staking Ratio Staking Reward Rate GSOL 74.9% Not provided BSOL 82% 7.32% Sources: Grayscale, Bitwise As far as I can tell from Grayscale's ETF page and from the fund's prospectus, GSOL doesn't provide an expected staking rewards rate estimate. BSOL shows 7.3% as of October 28th. However, I believe that figure will prove to be overly optimistic over the next 12 months. For instance, the REX Shares Osprey SOL fund currently has a 5.1% distribution rate. Furthermore, we can already see through on-chain data that staking rewards on Solana have been falling with the increased supply of staked SOL: 12mo Staked SOL Trend (StakingRewards) The chart above shows the one year trend for both staked SOL and Solana's staking rewards rate. As would be expected, the more SOL that is staked for rewards, the lower that staking rewards yield will ultimately go. Solana's inflation rate is declining as well. So without significant growth in transaction fees, the long-term expectation for SOL staking yield would be down even with staking supply remaining the same. As of article submission, the reward rate for staked Solana is 6.4%. Another Option for Staked Solana One of the reasons why I'm fairly excited about the launch of spot staking ETFs for Solana is that I've been staking Solana through a third-party platform called iTrustCapital. My account with that company is a traditional IRA. Thus, it is not required that I pay taxes yet on any rewards or realized gains. The same is now true for both BSOL and GSOL through a traditional IRA with a non-crypto niche broker. Factoring in iTrustCapital's 1% transaction fee when buying or selling Solana, the spot ETFs are now a significantly better short-to-medium-term opportunity for exposure due to the dramatically lower fees. For example, say I buy SOL through iTrust Capital and hold it for 5 years; my total expense will be 2%. However, if I buy BSOL through something like a traditional IRA or Roth IRA and pay a 0.2% management fee for 5 years, my net expense is just 1%. Of course, if I plan to hold the Solana for 10 to 20 years, then iTrustCapital would make more sense in theory. Yet, I'd still have to pay taxes on those gains and rewards whenever I end up taking the capital out of that account when I retire. Such would not be the case with BSOL (or GSOL) through something like a Roth IRA. Closing Comments My personal pick between both GSOL and BSOL at this juncture is BSOL. I like the fee waiver. I like the smaller net expense ratio when that fee waiver ends. I like the higher staking ratio. Bitwise's target for its staking ratio is ultimately 100%. For me, it's tough to beat a lower-fee product with more SOL staked. And the fact that BSOL can be purchased in a Roth IRA makes it likely a far better long-term option than what I'm currently doing for my staked Solana approach. While I'm definitely going to upgrade GSOL from a 'sell' given its conversion to a spot ETF, I still like BSOL better today. I'm initiating BSOL with a 'buy.'
