10-Q: 21Shares Hyperliquid Staking ETF Reports Strong NAV Growth

The 21Shares Hyperliquid Staking ETF (THYP) reported a significant increase in Net Asset Value (NAV) for the quarter ended September 30, 2026, driven by substantial appreciation in its HYPE holdings and successful staking rewards.

Summary

• The 21Shares Hyperliquid Staking ETF (THYP) reported a 27.55% increase in its Principal Market NAV, rising from $71,174,989 on June 30, 2026, to $90,781,670 on September 30, 2026.
• This NAV growth was primarily attributed to a 35.56% increase in the price of HYPE, which rose from $65.43 to $88.70 during the quarter.
• The ETF generated $333,391 in staking rewards, contributing to net investment income of $217,965 after accounting for sponsor and staking fees.
• Total net assets increased by $22,088,212, driven by investment income, realized gains from asset sales, and significant unrealized appreciation of $18,140,784 on HYPE holdings.
• The ETF declared a staking income distribution of $338,707 ($0.191360 per Share) on September 29, 2026.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a positive filing, driven by strong NAV growth and significant unrealized appreciation in the underlying asset, indicating robust performance in the current market environment.

Positives

• Significant increase in Net Asset Value (NAV) by 27.55% during the quarter.
• Substantial unrealized appreciation of $18,140,784 on HYPE investment, reflecting strong market performance of the underlying asset.
• Positive net investment income of $217,965, generated from staking rewards after fees.
• Successful staking operations, with an average of 91.04% of HYPE holdings staked during the quarter.
• The ETF's Net Asset Value per Share increased from $37.86 to $51.29.

Negatives

• Net decrease in outstanding Shares by 110,000, indicating more redemptions than creations during the quarter.
• Realized loss of $5,995 on in-kind liabilities paid.

Risks

• The Trust's investment strategy is concentrated in a single asset (HYPE) within a single asset class, exposing it to significant market risks associated with HYPE and digital assets.
• Temporary lock-up periods or transfer restrictions from staking could limit the Trust's ability to meet redemptions.
• The tax treatment of staking in a grantor trust is still developing, posing a risk of adverse regulatory or legal determinations that could affect the Trust's tax status or operations.
• Actual results may differ materially from forward-looking statements due to various risks and uncertainties, including market conditions and regulatory changes.

Future Outlook

The Trust aims to track the performance of HYPE as measured by the FTSE Hyperliquid Index, adjusted for expenses, and reflect staking rewards. The Sponsor does not actively manage the HYPE held by the Trust. The Trust intends to operate as a grantor trust for U.S. federal income tax purposes, utilizing a safe harbor for staking activities.

Management Comments

• The Sponsor believes that all adjustments necessary to present fairly the financial position and results of operations for the three months ended September 30, 2026, have been included.
• The Sponsor has evaluated the effectiveness of the Trusts disclosure controls and procedures and concluded they were effective.
• The Sponsor has disclosed to auditors and the audit committee all significant deficiencies and material weaknesses in internal control over financial reporting and any fraud involving management or employees with significant roles in internal control.

Industry Context

StockSavvy.ai notes that the performance of the 21Shares Hyperliquid Staking ETF is highly correlated with the price movements of HYPE, as it is a single-asset ETF. The increasing trend in staking rewards and the positive market sentiment towards digital assets are key drivers for such ETFs. The ETF's strategy of staking a significant portion of its holdings to generate yield is a common approach in the digital asset ETF space.

Comparison to Industry Standards

• The ETF's NAV growth of 27.55% in a single quarter is strong, especially considering it is driven by a single underlying asset's appreciation.
• The staking yield, after fees, contributes to the overall return, a practice common among crypto-focused ETFs aiming to provide yield in addition to asset appreciation.
• The 0.30% Sponsor Fee is competitive within the digital asset ETF market, though the total expense ratio can be influenced by other factors like staking fees.

Legal Proceedings

• As of September 30, 2026, the Trust was not subject to any material legal proceedings, nor are any material legal proceedings threatened against the Trust.

Related Party Transactions

• The Sponsor, 21Shares US LLC, is a related party. The Sponsor purchased Initial Seed Shares and Seed Creation Baskets.
• As of September 30, 2026, the Sponsor owned 20,000 Shares of the Trust.
• The Trust engaged in digital asset trading with FalconX Bravo, Inc., a subsidiary of FalconX (the ultimate parent of the Sponsor), consisting of purchases of $2,248,428.

Stakeholder Impact

• Shareholders benefit from the increase in NAV per Share and potential distributions from staking rewards.
• The concentration risk in HYPE means that a decline in HYPE's value would directly and significantly impact shareholder value.
• The tax treatment of staking activities could impact the tax liabilities of shareholders.

Next Steps

• Continue to track the performance of HYPE as measured by the FTSE Hyperliquid Index.
• Reflect rewards from staking a portion of the Trust's HYPE.
• Distribute staking income to Shareholders at least quarterly in the form of cash distributions.
• Operate the Trust in a manner that qualifies for grantor trust status for U.S. federal income tax purposes.

Key Dates

Recommendation

The ETF shows strong performance driven by the underlying asset's appreciation and successful staking operations. However, the inherent concentration risk in a single digital asset and the evolving regulatory landscape for such assets warrant a cautious approach. A 'hold' recommendation reflects the positive performance while acknowledging the significant risks associated with single-asset digital currency ETFs.

Keywords

HYPE, Staking ETF, Digital Assets, Cryptocurrency, FTSE Hyperliquid Index, NAV, Investment Fund, Quarterly Report