VanEck is exiting the Ethereum Futures ETF (EFUT) by September 16, 2024. EFUT had lower asset accumulation compared to VanEck's spot Ethereum ETF. In general, Ethereum is facing challenges due to competition and declining network revenues and fees.
VanEck plans to close the Ethereum Strategy ETF (EFUT) by September 16, 2024, and liquidate it by September 23.
Launched in October 2023, EFUT has suffered from poor asset accumulation and performance compared to VanEck's more successful Spot Ethereum ETF (ETHV).
Strategic Realignment
VanEck's closure of the EFUT ETF is part of a strategic review of its ETF offerings. EFUT, which launched in October 2023, was designed to provide exposure to Ethereum futures but has accumulated just $21 million in assets, in contrast to the Spot Ethereum ETF (ETHV)'s net inflows of $63 million.
The decision to liquidate EFUT is consistent with VanEck's ongoing evaluation of its operating performance, liquidity, investor interest and other factors.
EFUT shareholders will receive cash dividends based on the net asset value of their holdings following the ETF's closure and liquidation.
The change reflects VanEck's broader strategy to focus on more successful crypto-related products.
Challenges Facing Ethereum and an Ethereum Futures ETF
VanEck’s August 2024 Crypto Monthly Summary highlights several challenges contributing to Ethereum’s recent price volatility.
According to the VanEck report, Ethereum’s share of trading volume on decentralized exchanges dropped significantly from 42% in 2022 to 29% in 2024.
The report attributes this decline to several factors, including an overall decline in network revenue, deliberate policy decisions, and competition from higher-throughput blockchains such as Solana, Sui, and Aptos. These competitors are taking speculative demand away from Ethereum, exacerbating the price issue.
Additionally, Ethereum's Layer 1 revenues have been impacted by competing Layer 2 networks, with network fees falling by 99% since the Dencun upgrade in March 2024. This has increased competition within the Ethereum ecosystem and encouraged a proliferation of Layer 2 solutions, although some critics point out that the current number of Ethereum scaling solutions exceeds the necessary demand.
VanEck’s decision to close EFUT while continuing to offer other crypto-related products, such as the Digital Asset Mining ETF (DAM) and Bitcoin Strategy ETF (XBTF), highlights the firm’s continued commitment to digital assets despite the challenges facing Ethereum.
