Virtune Staked Polkadot ETP

Staking enables cryptocurrency owners to earn passive income by participating in the validation and confirmation of transactions on a blockchain through a process known as Proof of Stake. This mechanism is a fundamental component of Proof of Stake blockchains, like Ethereum, and plays a vital role in ensuring the security and authenticity of blockchain transactions. To facilitate a transaction on the blockchain securely and accurately, a validator must stake a certain amount of cryptocurrency as a guarantee of the transaction's legitimacy. The validator aims to stake as much cryptocurrency as possible to increase the likelihood of receiving rewards, which are paid out in the same type of cryptocurrency that was staked. For instance, if you stake Ethereum, you receive additional Ethereum as a reward. The annual reward percentage for staking can vary and may range from 0-14% or higher for some blockchains. Most cryptocurrency holders cannot act as validators themselves, as it requires significant amounts of cryptocurrency. Therefore, many choose to stake their assets through an established and trusted validator.

Staking enables investors to retrieve additional return on a cryptocurrency on top of the potential value growth of the relevant cryptocurrency. This is being made by contributing to the blockchain by participating in validating transactions, which is a natural part of a cryptocurrency blockchain that uses proof-of-stake. By staking cryptocurrencies, this is also avoids being diluted by inflation in the blockchain network. The annual reward rate vary between different cryptocurrencies, but is usually between 2-14%. In Virtune Staked Ethereum ETP, 75% of the annual rewards are being returned to the investors that have invested in the ETP, meaning that the NAV (Net Asset Value) can increase over time through the staking rewards. The remaining 25% are allocated to the custodian, staking provider and Virtune for managing and maintaining the staking operations of the ETP. For Polkadot, although the staking reward may vary, Virtune always guarantees a 4% reward to the product.

There are two main risks associated with staking: lockup periods and slashing.Lockup periodsLockup periods in staking refer to a time frame during which the staked cryptocurrency remains locked and cannot be readily moved or sold. It's similar to an interest savings account where your assets are tied up for a specific period. The length of the lockup period can vary, ranging from 0 days up to 21 days, depending on the specific staking protocol or platform. During this period, you won't have immediate access to your staked cryptocurrencies, which means you can't quickly sell or move your investment, even if the market conditions are unfavorable. To address this risk, Virtune diligently monitors and analyzes the market to ensure the staked portion of an ETP (Exchange Traded Product) maintains an adequate level of liquidity. This ensures that the ETP can be traded normally at all times. Slashing is a penalty imposed on the cryptocurrencies that are staked with a validator, which can have an impact on the staked funds. This penalty is incurred when a validator engages in certain undesirable behaviors, such as validating incorrect transactions or going offline.The specific reasons and conditions for slashing can vary across different cryptocurrencies and blockchain networks. Generally, the penalty results in a reduction of a small percentage of the staked cryptocurrencies. It's important to note that the exact percentage and consequences of slashing can vary depending on the protocol. When engaging in staking, it is crucial to choose a trustworthy and reputable validator. Virtune takes this aspect seriously and exclusively selects established, regulated, and leading staking providers to ensure minimal risk. We ensure minimum slashing risk by partnering with reputable and regulated staking-provider such as Coinbase.

Virtune exclusively uses non-custodial staking. This approach ensures that cryptocurrencies being staked remain securely stored in cold storage within our own custodian, minimizing theft risks and eliminating the dependence on a third-party service. The staking process is conducted directly from digital wallets, offering enhanced security and control. All cryptocurrencies staked by Virtune are consistently stored in cold storage, widely recognized as one of the safest methods for cryptocurrency storage.

On the other hand, custodial staking involves users transferring their cryptocurrencies to another entity for the purpose of staking. This method carries risks such as potential theft, as users' cryptocurrencies are managed and stored by someone else. For these reasons, and due to regulatory considerations, Virtune does not engage in custodial staking.

No, we never lend or send cryptocurrencies to any third party. We exclusively utilize non-custodian staking, which means all staking is being made directly from cold-storage at our custodian.

The market value of cryptocurrencies is determined by supply and demand, just like other financial assets. The crypto market is a relatively new market, therefore we can also see that the market value of cryptocurrencies varies more over time than traditional asset classes such as stocks. The maximum supply of almost every cryptocurrency is limited. In traditional currencies such as EUR and USD, which are also called fiat currency, the setup is different. The value of traditional currencies is largely based on the decisions of central banks. In the long term, the central banks' monetary policy will be able to lead to inflation. The cryptocurrencies, on the other hand, are immune to the central banks' monetary policy. Because of this, cryptocurrencies offer an interesting alternative to the current monetary system. Cryptocurrencies can have many different use cases. Since the first cryptocurrency (Bitcoin), thousands of different cryptocurrencies have appeared in the crypto market. Each cryptocurrency has its own strengths and weaknesses. When investing in cryptocurrencies, it is important to learn and discover the purpose of the relevant cryptocurrency and other background information to ensure that it is reliable and suitable to invest in.

Our products are listed on exchanges such as Nasdaq Stockholm and Boerse Stuttgart, and they can be traded through online brokers like Avanza and Nordnet. We are continuously working to expand the availability of trading our products on more exchanges and investment platforms, both within Sweden and internationally.

Virtune's ETPs are always 100% backed by equivalent cryptocurrencies stored in cold storage at Virtune's Nasdaq-approved custodian. The underlying cryptocurrencies determine the price of the ETPs. Price movements are always based on a 1:1 correlation to the underlying cryptocurrencies.

No, not if you buy our products via an ISK or capital insurance. But if you buy our products via a traditional/regular custody account, you need to declare each of your purchases/sales to the Swedish Tax Agency in your annual declaration.

Investing in Virtune's ETPs offers several distinct advantages for you as an investor:

Simple and Secure: You avoid the complexity of creating and managing a digital wallet, as well as the challenges of selecting a secure cryptocurrency exchange for trading. All aspects of security and storage are handled by us.

Tax Efficiency: Investing in our ETPs can be associated with tax benefits. In Sweden it is possible to invest in our ETPs through an Investment Savings Account (ISK) or a Capital Insurance means you do not need to declare individual transactions. Instead of a 30% capital gains tax on direct cryptocurrency trading, you pay an annual fixed tax, which can provide significant tax benefits.

Regulated Trading Venue: Our products are traded on Nasdaq Stockholm, a regulated and secure marketplace, adding an additional layer of safety and reliability to your investment.

Physically Backed Products: All our ETPs are 100% physically backed, meaning that actual cryptocurrencies are stored corresponding to the market value of each ETP, ensuring transparency and trust.

Staking Opportunities: Some of our products also offer staking, which is managed by us and provides extra returns without any effort required from you.

Virtune is a Swedish company based in Stockholm, registered as a financial institution with the Financial Supervisory Authority, with an EU-approved base prospectus for the market listing of crypto ETPs. We strive to be the safe choice for your crypto investments.