Grayscale Avalanche Staking ETF 10-Q

Item 1. Financial Statements (Unaudited) GRAYSCALE A VALANCHE STAKING ETF STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) (Amounts in thousands, except Share and per Share amounts) March 31, 2026 December 31, 2025 Assets: Investment in AVAX, at fair value (cost $ 14,699 and $ 14,518 as of March 31, 2026 and December 31, 2025, respectively) $ 5,309 $ 7,090 Total assets $ 5,309 $ 7,090 Liabilities: Sponsor's Staking Fee payable, related party $ - $ - Sponsor’s Fee payable, related party $ - $ - Total liabilities - - Net assets $ 5,309 $ 7,090 Shares issued and outstanding, no par value ( unlimited Shares authorized ) 247,980 237,980 Principal Market NAV per Share $ 21.41 $ 29.79 See accompanying notes to the unaudited financial statements. 4 GRAYSCALE AVALANCHE STAKING ETF SCHE DULES OF INVESTMENT (UNAUDITED) (Amounts in thousands, except quantity of AVAX and percentages) March 31, 2026 Quantity of AVAX Cost Fair Value % of Net Assets Investment in AVAX 597,200.87329633 $ 14,699 $ 5,309 100 % Total Investment $ 14,699 $ 5,309 100 % Net assets $ 5,309 100 % December 31, 2025 Quantity of AVAX Cost Fair Value % of Net Assets Investment in AVAX 575,012.34055965 $ 14,518 $ 7,090 100 % Total Investment $ 14,518 $ 7,090 100 % Net assets $ 7,090 100 % See accompanying notes to the unaudited financial statements. 5 GRAYSCALE AVALANCHE STAKING ETF STATEMEN TS OF OPERATIONS (UNAUDITED) (Amounts in thousands) Three Months Ended March 31, 2026 2025 Investment income: Staking Reward income $ 10 $ - Investment income - - Total Investment income 10 - Expenses: Sponsor's Staking Fee, related party 2 - Sponsor’s Fee, related party 32 13 Gross Expenses 34 13 Sponsor's Fee Waiver, related party ( 1 ) - Net Expenses 33 13 Net investment loss ( 23 ) ( 13 ) Net realized and unrealized loss on investment from: Net realized (loss) gain on investment in AVAX sold to pay expenses ( 43 ) 1 Net realized gain on investment in AVAX sold for redemption of Shares - - Net change in unrealized appreciation/depreciation on investment in AVAX ( 1,962 ) ( 1,304 ) Net realized and unrealized loss on investment ( 2,005 ) ( 1,303 ) Net decrease in net assets resulting from operations $ ( 2,028 ) $ ( 1,316 ) See accompanying notes to the unaudited financial statements. 6 G RAYSCALE AVALANCHE STAKING ETF STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (Amounts in thousands, except change in Shares outstanding) Three Months Ended March 31, 2026 2025 Decrease in net assets from operations: Net investment loss $ ( 23 ) $ ( 13 ) Net realized (loss) gain on investment in AVAX sold to pay expenses ( 43 ) 1 Net realized gain on investment in AVAX sold for redemption of Shares - - Net change in unrealized appreciation/depreciation on investment in AVAX ( 1,962 ) ( 1,304 ) Net decrease in net assets resulting from operations ( 2,028 ) ( 1,316 ) Decrease in net assets from capital share transactions: Shares issued 247 131 Shares redeemed - - Net increase in net assets resulting from capital share transactions 247 131 Total decrease in net assets from operations and capital share transactions ( 1,781 ) ( 1,185 ) Net assets: Beginning of period 7,090 2,674 End of period $ 5,309 $ 1,489 Change in Shares outstanding: (1) Shares outstanding at beginning of period 237,980 30,140 Shares issued 10,000 2,300 Shares redeemed - - Net increase in Shares 10,000 2,300 Shares outstanding at end of period 247,980 32,440 (1) Share amounts have been retroactively adjusted to reflect the 1-for-5 Reverse Share Split of the Trust’s issued and outstanding Shares completed on March 6, 2026. See accompanying notes to the unaudited financial statements. 7 GRAYSCALE AVALANCHE STAKING ETF N OTES TO THE UNAUDITED FINANCIAL STATEMENTS 1. Organization Grayscale Avalanche Staking ETF (the “Trust”) is a Delaware Statutory Trust that was formed on November 3, 2021 and commenced operations on August 20, 2024. The Trust’s investment objective is for the value of the Shares (based on AVAX per Share) to reflect the value of the Avalanche tokens (“AVAX”) held by the Trust and to reflect rewards from Staking a portion of the Trust’s AVAX, less the Trust’s expenses and other liabilities. The Trust issues Shares only in one or more blocks of 10,000 Shares (a block of 10,000 Shares is called a “Basket”) only to certain authorized participants (“Authorized Participants”) in exchange for AVAX. The Trust’s registration statement on Form S-1 relating to its continuous public offering of Shares was declared effective by the Securities and Exchange Commission (“SEC”) on March 11, 2026 and the Shares were listed and began trading on Nasdaq Stock Market LLC (“NASDAQ”) under the symbol “GAVA” on March 12, 2026 (the “Uplisting Date”). Grayscale Investments, LLC (“GSI”) was the sponsor of the Trust before January 1, 2025, Grayscale Operating, LLC (“GSO”) was the co-sponsor of the Trust from January 1, 2025 to May 3, 2025, and Grayscale Investments Sponsors, LLC (“GSIS”, or the “Sponsor”) was the co-sponsor of the Trust from January 1, 2025 to May 3, 2025 and is the sole remaining sponsor thereafter. GSI was, and each of GSO and GSIS are, a consolidated subsidiary of Digital Currency Group, Inc. (“DCG”). The Sponsor is responsible for the day-to-day administration of the Trust pursuant to the provisions of the Trust Agreement. The Sponsor is responsible for preparing and providing annual and quarterly reports on behalf of the Trust to investors and is also responsible for selecting and monitoring the Trust’s service providers. As partial consideration for the Sponsor’s services, the Trust pays the Sponsor a Sponsor’s Fee as discussed in Note 6. The Sponsor also acts as the sponsor and manager of other single-asset and diversified investment products, each of which is an affiliate of the Trust. Information related to the affiliated investment products can be found on the Sp onsor’s website at www.grayscale.com/resources/regulatory-filings. Any information contained on or linked from such website is not part of nor incorporated by reference into these unaudited financial statements. The Trust may receive staking rewards as a result of the Trust’s Staking pursuant to the Staking Arrangements. Staking on the Avalanche Network refers to the use of AVAX, or the permission for AVAX to be used through an agent or otherwise, in the Avalanche Network’s proof-of-stake validation protocol in exchange for the receipt of staking rewards paid in kind (“Staking”). The Trust Agreement permits the Trust to engage in Staking, and on March 12, 2026, the Trust commenced Staking pursuant to the Staking Arrangements. The Sponsor has caused, and from time to time may cause, the Trust to enter into written arrangements (the “Staking Arrangements”) with the Custodian and one or more third party staking providers (each, a “Staking Provider”), pursuant to which a portion of the Trust’s AVAX is made available for staking through validator operations conducted by such Staking Providers (“Provider-Facilitated Staking”). The Custodian and the applicable Staking Provider are entitled to receive a portion of the gross staking rewards generated thereunder, representing the Custodian’s fee and the Staking Provider’s share of such staking rewards (collectively, the “Validator Fees”), with the remaining staking rewards received by the Trust, as discussed in Note 6. Liquidity Providers facilitate the purchase and sale of AVAX in connection with cash orders for creations or redemptions of Baskets. The Liquidity Providers with which GSIS, acting in its capacity as the “Liquidity Engager,” will engage in AVAX transactions are third parties that are not affiliated with the Sponsor or the Trust and are not acting as agents of the Trust, the Sponsor, or any Authorized Participant. Except for the contractual relationships between each Liquidity Provider and GSIS in its capacity as the Liquidity Engager, there is no contractual relationship between each Liquidity Provider and the Trust, the Sponsor, or any Authorized Participant. The Liquidity Engager may engage additional Liquidity Providers who are unaffiliated with the Trust in the future. Coinbase, Inc. is the prime broker (the “Prime Broker”) of the Trust, and Coinbase Custody Trust Company, LLC is the custodian (the “Custodian”). The Prime Broker Agreement establishes the rights and responsibilities of the Custodian, the Prime Broker, the Sponsor and the Trust with respect to the Trust’s AVAX which is held in accounts maintained and operated by the Custodian, as a fiduciary with respect to the Trust’s assets, and the Prime Broker (together with the Custodian, the “Custodial Entities”) on behalf of the Trust. The Custodian is responsible for safeguarding the AVAX held by the Trust, and holding the private key(s) that provide access to the Trust’s digital wallets and vaults. The transfer agent for the Trust (the “Transfer Agent”) is The Bank of New York Mellon. The responsibilities of the Transfer Agent are to (1) facilitate the issuance and redemption of shares of the Trust; (2) respond to correspondence by Trust shareholders and others relating to its duties; (3) maintain shareholder accounts; and (4) make periodic reports to the Trust. The co-transfer agent for the Trust (the “Co-Transfer Agent”) is Continental Stock Transfer & Trust Company. The administrator for the Trust (the “Administrator”) is BNY Mellon Asset Servicing, a division of The Bank of New York Mellon. BNY Mellon Asset Servicing provides administration and accounting services to the Trust. The Administrator’s fees are paid on behalf of the Trust by the Sponsor. The marketing agent for the Trust (the “Marketing Agent”) is Foreside Fund Services, LLC. The Marketing Agent provides the following services to the Sponsor: (i) assist the Sponsor in facilitating Participant Agreements between and among Authorized Participants, the 8 Sponsor, on behalf of the Trust, and the Transfer Agent; (ii) provide prospectuses to Authorized Participants; (iii) work with the Transfer Agent to review and approve orders placed by the Authorized Participants and transmitted to the Transfer Agent; (iv) review and file applicable marketing materials with FINRA and (v) maintain, reproduce and store applicable books and records. On March 6, 2026, the Trust completed a 1-for-5 Reverse Share Split of the Trust’s issued and outstanding Shares. In connection with the Reverse Share Split effective for shareholders of record on March 5, 2026, every 5 issued and outstanding Shares of the Trust were converted into one Share. The number of outstanding Shares and per-Share amounts disclosed for periods prior to March 6, 2026 have been retroactively adjusted to reflect the effects of the Share Split. On March 12, 2026, Shares of the Trust began trading on NASDAQ following the effectiveness of the Trust’s registration statement on Form S-1, as amended (File No. 333-289829). The Trust’s trading symbol on NASDAQ is “GAVA” and the CUSIP number for its Shares is 38963A102. The Trust may also receive Incidental Rights and/or IR Virtual Currency as a result of the Trust’s investment in AVAX, in accordance with the terms of the Trust Agreement. Incidental Rights are rights to claim, or otherwise establish dominion and control over, any virtual currency or other asset or right, which rights are incident to the Trust’s ownership of AVAX and arise without any action of the Trust, or of the Sponsor or Trustee on behalf of the Trust; IR Virtual Currency is any virtual currency tokens, or other asset or right, received by the Trust through the exercise (subject to the applicable provisions of the Trust Agreement) of any Incidental Right. The Sponsor has committed to cause the Trust to abandon irrevocably for no direct or indirect consideration, effective immediately prior to each time at which the Trust creates or redeems Shares, all Incidental Rights and IR Virtual Currency to which it would otherwise be entitled as of such time. In furtherance of that commitment, the Prime Broker Agreement provides that the Trust is abandoning irrevocably, for no direct or indirect consideration, effective immediately prior to each Creation Time and each Redemption Time, all Incidental Rights or IR Virtual Currency to which it would otherwise be entitled as of such time. The Sponsor has committed to cause the Trust not to take any Affirmative Action to acquire any Incidental Rights or IR Virtual Currency, thereby irrevocably abandoning any Incidental Rights and IR Virtual Currency to which the Trust may become entitled in the future. Because the Sponsor has now committed to causing the Trust to irrevocably abandon all Incidental Rights and IR Virtual Currency to which the Trust otherwise would become entitled in the future, and causing the Trust not to take any Affirmative Actions, the Trust will not receive any direct or indirect consideration for the Incidental Rights or IR Virtual Currency and thus the value of the Shares will not reflect the value of the Incidental Rights or IR Virtual Currency. In addition, in the event the Sponsor seeks to change the Trust’s policy with respect to Incidental Rights or IR Virtual Currency, an application would need to be filed with the SEC by NASDAQ seeking approval to amend its listing rules to permit the Trust to distribute the Incidental Rights or IR Virtual Currency in-kind to an agent of the shareholders for resale by such agent. 2. Summary of Significant Accounting Policies In the opinion of management of the Sponsor of the Trust, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position as of March 31, 2026 and December 31, 2025 and results of operations for the three months ended March 31, 2026 and 2025 have been made. The results of operations for the periods presented are not necessarily indicative of the results of operations expected for the full year. These unaudited financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2025 included in our Registration Statement on Form S-1. The following is a summary of significant accounting policies followed by the Trust: The financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The Trust qualifies as an investment company for accounting purposes pursuant to the accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services—Investment Companies . As such, the Trust is exempt from the requirement to present a statement of cash flows pursuant to ASC Topic 230, Statement of Cash Flows . Accordingly, a statement of cash flows has not been presented. The Trust uses fair value as its method of accounting for AVAX in accordance with its classification as an investment company for accounting purposes. The Trust is not a registered investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates and these differences could be material. The Trust conducts its transactions in AVAX, including receiving AVAX for the creation of Shares and delivering AVAX for the redemption of Shares and for the payment of the Sponsor’s Fee and Sponsor’s Staking Fee. The Sponsor will determine the Trust’s net asset value (“NAV”) on each business day as of 4:00 p.m., New York time, or as soon thereafter as practicable. Cash and Cash Equivalents Generally, the Trust does not intend to hold cash, except in connection with cash orders for creations or redemptions of Baskets. Cash includes non-interest bearing non-restricted cash with one institution. Cash in a bank deposit account, at times, may exceed U.S. federally insured limits. The Trust has not experienced any losses in such accounts and does not believe it is exposed to any significant credit risk on such bank deposits. 9 Principal Market and Fair Value Determination To determine which market is the Trust’s principal market (or in the absence of a principal market, the most advantageous market) for purposes of calculating the Trust’s net asset value in accordance with U.S. GAAP (“Principal Market NAV”), the Trust follows ASC Topic 820-10, Fair Value Measurement , which outlines the application of fair value accounting. ASC 820-10 determines fair value to be the price that would be received for AVAX in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820-10 requires the Trust to assume that AVAX is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. The Trust only receives AVAX in connection with a creation order from the Authorized Participant (or a Liquidity Provider) and does not itself transact on any Digital Asset Markets. Therefore, the Trust looks to market-based volume and level of activity for Digital Asset Markets. The Authorized Participant(s), or a Liquidity Provider, may transact in a Brokered Market, a Dealer Market, Principal-to-Principal Markets and Exchange Markets (referred to as “Trading Platform Markets” in this Quarterly Report), each as defined in the FASB ASC Master Glossary (collectively, “Digital Asset Markets”). In determining which of the eligible Digital Asset Markets is the Trust’s principal market, the Trust reviews these criteria in the following order: First, the Trust reviews a list of Digital Asset Markets that maintain practices and policies designed to comply with anti-money laundering (“AML”) and know-your-customer (“KYC”) regulations, and non-Digital Asset Trading Platform Markets that the Trust reasonably believes are operating in compliance with applicable law, including federal and state licensing requirements, based upon information and assurances provided to it by each market. Second, the Trust sorts these Digital Asset Markets from high to low by market-based volume and level of activity of AVAX traded on each Digital Asset Market in the trailing twelve months. Third, the Trust then reviews pricing fluctuations and the degree of variances in price on Digital Asset Markets to identify any material notable variances that may impact the volume or price information of a particular Digital Asset Market. Fourth, the Trust then selects a Digital Asset Market as its principal market based on the highest market-based volume, level of activity and price stability in comparison to the other Digital Asset Markets on the list. Based on information reasonably available to the Trust, Trading Platform Markets have the greatest volume and level of activity for the asset. The Trust therefore looks to accessible Trading Platform Markets as opposed to the Brokered Market, Dealer Market and Principal-to-Principal Markets to determine its principal market. As a result of the aforementioned analysis, a Trading Platform Market has been selected as the Trust’s principal market. The Trust determines its principal market (or in the absence of a principal market the most advantageous market) annually and conducts a quarterly analysis to determine (i) if there have been recent changes to each Digital Asset Market’s trading volume and level of activity in the trailing twelve months, (ii) if any Digital Asset Markets have developed that the Trust has access to, or (iii) if recent changes to each Digital Asset Market’s price stability have occurred that would materially impact the selection of the principal market and necessitate a change in the Trust’s determination of its principal market. Investment Transactions and Revenue Recognition The Trust considers investment transactions to be the receipt of AVAX for Share creations and the delivery of AVAX for Share redemptions, or for payment of expenses in AVAX. The Trust records its investment transactions on a trade date basis and changes in fair value are reflected as net change in unrealized appreciation or depreciation on investments. Realized gains and losses are calculated using the specific identification method. Realized gains and losses are recognized in connection with transactions including settling obligations for the Sponsor’s Fee in AVAX. AVAX Staking The Trust earns staking rewards by delegating a portion of its AVAX on the Avalanche Network’s proof-of-stake consensus protocol. The Sponsor has entered into contractual arrangements with the Custodian and one or more third-party staking service providers, which may include affiliates of the Custodian or other institutional validators, to facilitate the staking of the Trust’s AVAX. The Trust retains control of its AVAX throughout the staking process. The delegation of AVAX for staking purposes does not constitute a sale, transfer, or other derecognition event, as control of the AVAX is not transferred to the validator or staking provider. Accordingly, the staked AVAX is not derecognized under ASC Topic 610-20, Other Income, Gains and Losses from the Derecognition of Nonfinancial Assets, or ASC Topic 350-60 , Intangibles, Goodwill and Other, Crypto Assets . The Trust recognizes staking rewards as revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Under the staking arrangements, the validator (e.g., the Custodian or other staking provider) is considered the customer, as it receives access to the Trust’s staking capacity (i.e., the delegation of AVAX), which represents the Trust’s performance obligation. In exchange, the Trust is entitled to staking rewards generated by the Avalanche protocol, net of Validator Fees. 10 Staking rewards represent variable consideration, as the amount of rewards is not known until the applicable validation activities are completed, and the Trust receives rewards in their custodial account. The contract term is the length of each staking epoch. Staking rewards are recognized as revenue when the Trust satisfies its performance obligations (i.e., successfully validates blocks or transactions as determined by the protocol). Staking rewards are received in AVAX, which represents non-cash consideration. Non-cash consideration is measured at fair value at the inception of each contract (i.e., the beginning of each staking epoch), in accordance with ASC 606. Because the Trust is not the principal to the block validation service, it does not control the full output of the reward-generating activity, and instead receives net staking rewards, after Validator Fees are deducted. As such, the Trust presents staking revenue on a net basis, reflecting only the portion of protocol rewards to which it is entitled. Staking revenue is recorded as staking reward income on the Statements of Operations. Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the ‘exit price’) in an orderly transaction between market participants at the measurement date. U.S. GAAP utilizes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Trust. Unobservable inputs reflect the Trust’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows: • Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, these valuations do not entail a significant degree of judgment. • Level 2 – Valuations based on quoted prices in markets that are not active or for which significant inputs are observable, either directly or indirectly. • Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The availability of valuation techniques and observable inputs can vary by investment. To the extent that valuations are based on sources that are less observable or unobservable in the market, the determination of fair value requires more judgment. Fair value estimates do not necessarily represent the amounts that may be ultimately realized by the Trust. Fair Value Measurement Using (Amounts in thousands) Amount at Fair Value Level 1 Level 2 Level 3 March 31, 2026 Assets Investment in AVAX $ 5,309 $ 5,309 $ - $ - December 31, 2025 Assets Investment in AVAX $ 7,090 $ 7,090 $ - $ - Segment Reporting The Chief Executive Officer and Chief Financial Officer of the Sponsor act as the Trust’s chief operating decision maker (“CODM”). The Trust represents a single operating segment, as the CODM monitors the operating results of the Trust as a whole and the Trust’s passive investment objective is pre-determined in accordance with the terms of the Trust Agreement. The financial information in the form of the Trust’s total returns, expense ratios and changes in net assets (i.e., changes in net assets resulting from operations and capital share transactions), which are used by the CODM to assess the segment’s performance, are consistent with that presented within the Trust’s financial statements. Segment assets are reflected on the accompanying Statements of Assets and Liabilities as Total assets and the only significant segment expenses, the Sponsor’s Fee, related party, and Sponsor’s Staking Fee, related party, are included in the accompanying Statements of Operations. 3. Fair Value of AVAX 11 AVAX is held by the Custodian on behalf of the Trust and is carried at fair value. As of March 31, 2026 and December 31, 2025 , the Trust held 597,200.87329633 and 575,012.34055965 AVAX, respectively. The Trust determined the fair value per AVAX to be $ 8.89 and $ 12.33 on March 31, 2026 and December 31, 2025 , respectively, using the price provided at 4:00 p.m., New York time, by the Digital Asset Trading Platform Market considered to be the Trust’s principal market (Coinbase). The following represents the changes in quantity of AVAX and the respective fair value: (Amounts in thousands, except AVAX amounts) Quantity Fair Value Balance at December 31, 2024 74,668.54471653 $ 2,674 AVAX contributed 5,677.24126806 131 AVAX distributed for Sponsor’s Fee, related party ( 473.14673580 ) ( 13 ) Net change in unrealized appreciation/depreciation on investment in AVAX - ( 1,304 ) Net realized gain on investment in AVAX sold to pay expenses - 1 Balance at March 31, 2025 79,872.63924879 1,489 (Amounts in thousands, except AVAX amounts) Quantity Fair Value Balance at December 31, 2025 575,012.34055965 $ 7,090 AVAX contributed 24,046.63990477 247 AVAX redeemed - - AVAX distributed for Sponsor’s Fee, related party ( 2,750.40397203 ) ( 31 ) Staking reward income 1,124.06220756 10 AVAX distributed for Sponsor's Staking Fee, related party ( 231.76540362 ) ( 2 ) Net change in unrealized appreciation/depreciation on investment in AVAX - ( 1,962 ) Net realized loss on investment in AVAX sold to pay expenses - ( 43 ) Net realized gain on investment in AVAX sold for redemption of Shares - - Balance at March 31, 2026 597,200.87329633 $ 5,309 12 4. Creations and Redemptions of Shares The Trust creates and redeems Shares from time to time, but only in one or more Baskets issued to the Authorized Participant in exchange for the delivery of AVAX to the Trust or the distribution of AVAX by the Trust. The amount of AVAX required for each Creation Basket or Redemption Basket is determined by dividing (x) the amount of AVAX owned by the Trust at 4:00 p.m., New York time, on such trade date of a creation or redemption order, after deducting the amount of AVAX representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust, by (y) the number of Shares outstanding at such time and multiplying the quotient obtained by 10,000. Each Share represented approximately 2.4083 and 2.4162 of one AVAX at March 31, 2026 and December 31, 2025, respectively. As of the date of this Quarterly Report, Authorized Participants may submit orders to create or redeem Shares through transactions that are referred to as “cash orders” or “in-kind orders”, in accordance with the agreements with Authorized Participants. Three Months Ended March 31, 2026 2025 Activity in Number of Shares Issued and Redeemed: (1) Shares issued 10,000 2,300 Shares redeemed - - Net Change in Number of Shares Issued and Redeemed 10,000 2,300 Three Months Ended March 31, (Amounts in thousands) 2026 2025 Activity in Value of Shares Issued and Redeemed: Shares issued $ 247 $ 131 Shares redeemed - - Net Change in Value of Shares Issued and Redeemed $ 247 $ 131 (1) Share amounts for periods presented prior to the Reverse Share Split have been retroactively adjusted to reflect the 1-for-5 Reverse Share Split of the Trust’s issued and outstanding Shares completed on March 6, 2026. AVAX receivable represents the value of AVAX covered by contractually binding orders for the creation of Shares where the AVAX has not yet been transferred to the Trust’s account. Generally, ownership of the AVAX is transferred within no more than two business days of the trade date. As of March 31, (Amounts in thousands) 2026 2025 AVAX receivable $ - $ - AVAX payable represents the value of AVAX covered by contractually binding orders for the redemption of Shares where the AVAX has not yet been transferred out of the Trust’s account. Generally, ownership of the AVAX is transferred within no more than two business days of the trade date. As of March 31, (Amounts in thousands) 2026 2025 AVAX payable $ - $ - 5. Income Taxes The Sponsor takes the position that the Trust is properly treated as a grantor trust for U.S. federal income tax purposes. Assuming that the Trust is a grantor trust, the Trust will not be subject to U.S. federal income tax. Rather, if the Trust is a grantor trust, each beneficial owner of Shares will be treated as directly owning its pro rata Share of the Trust’s assets and a pro rata portion of the Trust’s income, gains, losses and deductions will “flow through” to each beneficial owner of Shares. If the Trust were not properly classified as a grantor trust, the Trust might be classified as a partnership for U.S. federal income tax purposes. However, due to the uncertain treatment of digital assets, with respect to staking and including forks, airdrops and similar occurrences for U.S. federal income tax purposes, there can be no assurance in this regard. If the Trust were classified as a partnership for U.S. federal income tax purposes, the tax consequences of owning Shares generally would not be materially different from the tax consequences described herein, although there might be certain differences, including with respect to timing. In addition, tax information reports provided to beneficial owners of Shares would be made in a different form. If the Trust were not classified as either a grantor trust or a partnership for U.S. federal income tax purposes, it would be classified as a corporation for such purposes. In that event, the Trust would be subject to entity-level U.S. federal income tax (currently at the rate of 21 %) on its net taxable income and certain 13 distributions made by the Trust to shareholders would be treated as taxable dividends to the extent of the Trust’s current and accumulated earnings and profits. In accordance with U.S. GAAP, the Trust has defined the threshold for recognizing the benefits of tax positions in the financial statements as “more-likely-than-not” to be sustained by the applicable taxing authority and requires measurement of a tax position meeting the “more-likely-than-not” threshold, based on the largest benefit that is more than 50% likely to be realized. Tax positions deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit in the current period. As of, and during the periods ended March 31, 2026 and December 31, 2025, the Trust did no t have a liability for any unrecognized tax amounts. However, the Sponsor’s conclusions concerning its determination of “more-likely-than-not” tax positions may be subject to review and adjustment at a later date based on factors including, but not limited to, further implementation guidance, and ongoing analyses of and changes to tax laws, regulations and interpretations thereof. The Sponsor of the Trust has evaluated whether or not there are uncertain tax positions that require financial statement recognition and has determined that no reserves for uncertain tax positions related to federal, state and local income taxes existed as of March 31, 2026 or December 31, 2025 . 6. Related Parties The Trust considered the following entities, their directors, and certain employees to be related parties of the Trust as of March 31, 2026 : DCG, GSO, GSIS, and Grayscale Securities, LLC. As of March 31, 2026 and December 31, 2025 , 9,183 and 45,992 Shares of the Trust were held by related parties of the Trust, respectively. On March 11, 2026, the Sponsor and the Trustee entered into Amendment No. 1 to the Second Amended and Restated Trust Agreement in order to reduce the Sponsor’s Fee to 0.35 %, effective as of the Uplisting Date. As a result, effective March 12, 2026 , the Sponsor’s Fee was lowered from 2.5 % to 0.35 %. In accordance with the Trust Agreement governing the Trust, the Trust pays a fee to the Sponsor, calculated as 0.35 % of the aggregate value of the Trust’s assets, less its liabilities (which include any accrued but unpaid expenses up to, but excluding, the date of calculation), as calculated and published by the Sponsor or its delegates in the manner set forth in the Trust Agreement (the “Sponsor’s Fee”). The Sponsor’s Fee accrues daily in U.S. dollars and is payable in AVAX, daily in arrears. The amount of AVAX payable in respect of each daily U.S. dollar accrual will be determined by reference to the same U.S. dollar value of AVAX used to determine such accrual. For purposes of these financial statements, the U.S. dollar value of AVAX is determined by reference to the Digital Asset Trading Platform Market that the Trust considers its principal market as of 4:00 p.m., New York time, on each valuation date. The Trust held no Incidental Rights or IR Virtual Currency as of March 31, 2026 and December 31, 2025 . No Incidental Rights or IR Virtual Currencies have been distributed in payment of the Sponsor’s Fee during the three months ended March 31, 2026 and 2025. Effective March 12, 2026, and pursuant to the Staking Arrangements, the Custodian and the applicable Staking Provider are entitled to receive a portion of the gross staking rewards generated thereunder, representing the Custodian’s fee and the Staking Provider’s share of such staking rewards (collectively, the “Validator Fees”), with the remaining staking rewards received by the Trust. The Sponsor is entitled to receive a fee equal to a portion of the staking rewards, payable in AVAX, which accrues daily in U.S. dollars and is calculated as a per annum percentage of the staking rewards received by the Trust, as directed by the Sponsor in its sole discretion (the “Sponsor’s Staking Fee”). The Sponsor’s Staking Fee is payable daily in arrears. The Sponsor’s Staking Fee and the Validator Fees together represent an aggregate of 23 % of the gross staking rewards generated under the Staking Arrangements. A portion of the gross staking rewards is paid to non-related parties and the Trust receives and retains the remainder of such gross staking rewards. As partial consideration for receipt of the Sponsor’s Fee, the Sponsor is obligated under the Trust Agreement to assume and pay all fees and other expenses incurred by the Trust in the ordinary course of its affairs, excluding taxes, but including marketing fees; administrator fees, if any; custodian fees; transfer agent fees; trustee fees; the fees and expenses related to the listing, quotation or trading of the Shares on any secondary market (including customary legal, marketing and audit fees and expenses) in an amount up to $ 600,000 in any given fiscal year; ordinary course legal fees and expenses; audit fees; regulatory fees, including, if applicable, any fees relating to the registration of the Shares under the Securities Act or the Exchange Act; printing and mailing costs; the costs of maintaining the Trust’s website and applicable license fees (together, the “Sponsor-paid Expenses”), provided that any expense that qualifies as an Additional Trust Expense will be deemed to be an Additional Trust Expense and not a Sponsor-paid Expense. The Trust may incur certain extraordinary, non-recurring expenses that are not Sponsor-paid Expenses, including, but not limited to, taxes and governmental charges, expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect the Trust or the interests of shareholders, any indemnification of the Custodian or other agents, service providers or counterparties of the Trust, the fees and expenses related to the listing, quotation or trading of the Shares on any secondary market (including legal, marketing and audit fees and expenses) to the extent exceeding $ 600,000 in any given fiscal year and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters (collectively “Additional Trust Expenses”). In such circumstances, the Sponsor or its delegate (i) will instruct the Custodian to withdraw from the Vault Balance AVAX in such quantity as may be necessary to permit payment of such Additional Trust Expenses and (ii) may either (x) cause the Trust (or its delegate) to convert such AVAX into U.S. dollars or other fiat 14 currencies at the Actual Exchange Rate or (y) when the Sponsor incurs such expenses on behalf of the Trust, cause the Trust (or its delegate) to deliver such AVAX in kind to the Sponsor, in each case in such quantity as may be necessary to permit payment of such Additional Trust Expenses. The Sponsor, from time to time, may temporarily waive all or a portion of the Sponsor’s Fee of the Trust in its discretion for stated periods of time. Effective March 12, 2026, the Sponsor has determined to waive a portion of the Sponsor’s Fee until the earlier of (x) June 12, 2026 and (y) the first date on which the NAV of the Trust exceeds $ 1.0 billion (such period, the “Fee Waiver Period”). If the Trust’s NAV exceeds $1.0 billion prior to June 12, 2026, the Sponsor’s Fee charged on assets over $1.0 billion will be 0.35%. After the Fee Waiver Period is over, the Sponsor’s Fee will be 0.35 %. Prior to the Fee Waiver Period, for the period from January 1, 2026 until March 12, 2026, and the three months ended March 31, 2025, the Trust incurred Sponsor’s Fees of $ 29,914 and $ 12,977 , respectively. As of March 31, 2026 and December 31, 2025 , there were no accrued and unpaid Sponsor’s Fees. In addition, the Sponsor may pay Additional Trust Expenses on behalf of the Trust, which are reimbursable by the Trust to the Sponsor. For the three months ended March 31, 2026 and 2025 , the Sponsor did no t pay any Additional Trust Expenses on behalf of the Trust. For the three months ended March 31, 2026 , the Trust incurred Sponsor’s Staking Fees of $ 2,029 . 7. Concentration Risk The Trust’s investment portfolio is concentrated in AVAX, and its net asset value and results of operations are directly affected by the price of AVAX, which has historically been highly volatile. As a result, the Trust may experience significant fluctuations in net asset value, including periods of substantial losses. This concentration also exposes the Trust to risks specific to AVAX and its supporting infrastructure, including market liquidity constraints and operational or cybersecurity risks associated with the custody and transfer of AVAX. 8 . Financial Highlights Per Share Performance Three Months Ended March 31, 2026 2025 Per Share Data: (1) Principal Market NAV, beginning of period $ 29.79 $ 88.72 Net decrease in net assets from investment operations: Net investment loss ( 0.09 ) ( 0.42 ) Net realized and unrealized loss ( 8.29 ) ( 42.41 ) Net decrease in net assets resulting from operations ( 8.38 ) ( 42.83 ) Principal Market NAV, end of period $ 21.41 $ 45.89 Total return - 28.13 % - 48.28 % Ratios to average net assets: Net investment loss - 1.47 % - 2.50 % Sponsor's Fee - 2.06 % - 2.50 % Sponsor's Staking Fee - 0.14 % 0.00 % Gross Expenses - 2.20 % - 2.50 % Sponsor's Fee Waiver 0.07 % 0.00 % Net Expenses - 2.13 % - 2.50 % (1) Per Share amounts for periods presented prior to the Reverse Share Split have been retroactively adjusted to reflect the 1-for-5 Reverse Share Split of the Trust’s issued and outstanding Shares completed on March 6, 2026. Ratios of net investment loss and expenses to average net assets have been annualized. An individual shareholder’s return, ratios, and per Share performance may vary from those presented above based on the timing of Share transactions. The amount shown for a Share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the number of Shares issued in Creations occurring at an operational value derived from an operating metric as defined in the Trust Agreement. Total return is calculated assuming an initial investment made at the Principal Market NAV at the beginning of the period and assuming redemption on the last day of the period . 9 . Indemnifications 15 In the normal course of business, the Trust enters into certain contracts that provide a variety of indemnities, including contracts with the Sponsor and affiliates of the Sponsor, DCG and its officers, directors, employees, subsidiaries and affiliates, and the Custodian , as well as others relating to services provided to the Trust. The Trust’s maximum exposure under these and its other indemnities is unknown. However, no liabilities have arisen under these indemnities in the past and, while there can be no assurances in this regard, there is no expectation that any will occur in the future. Therefore, the Sponsor does not consider it necessary to record a liability in this regard. 10. Subsequent Events As previously disclosed, on October 22, 2025, GSOIH consummated an internal corporate reorganization (the “Management Reorganization”). As a result of the Management Reorganization as of October 22, 2025, (i) Grayscale Investments, Inc. (“Grayscale Investments”) is the sole managing member of GSO, the sole member of the Sponsor and (ii) the Board of Directors of Grayscale Investments became responsible for managing and directing the affairs of the Sponsor, and consists of Barry Silbert, Mark Shifke, Simon Koster, Peter Mintzberg and Edward McGee. On May 4, 2026, a Board of Managers of Grayscale Investments Sponsors, LLC was created to manage and direct the affairs of the Sponsor, under authority delegated by the board of Grayscale Investments. While the board of Grayscale Investments retains overall oversight of Grayscale Investments and its subsidiaries as a whole, including the Sponsor, the Board of Managers of the Sponsor consists of Peter Mintzberg, Edward McGee, and Craig Salm. Mr. Mintzberg, Mr. McGee, and Mr. Salm are granted authority to manage the day-to-day affairs of the Sponsor under the amended and restated limited liability company agreement of the Sponsor. The Sponsor has evaluated all subsequent events through the issuance of the financial statements and has noted no other events requiring adjustment or additional disclosure in the financial statements other than the item noted above. 16