What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-13 compared with 2025-05-13 · 105 added, 87 removed, 103 unchanged (65% of the section changed)

Discussion and Analysis of Financial Condition and Results of Operations

This information should be

read in conjunction with the financial statements and notes included in Item 1 of Part I of this Form 10-Q.

This Form 10-Q contains “forward-looking

statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, and

such forward-looking statements involve risks and uncertainties.

All statements (other than statements of historical fact) included in

this Form 10-Q that address activities, events or developments that may occur in the future, the Trust’s operations, the Sponsor’s

plans and references to the Trust’s future success and other similar matters are forward-looking statements.

Words such as “could,”

“would,” “may,” “expect,” “intend,” “estimate,” “predict,” and

variations on such words or negatives thereof, and similar expressions that reflect our current views with respect to future events and

Trust performance, are intended to identify such forward-looking statements.

These forward-looking statements are only predictions, subject

to risks and uncertainties that are difficult to predict and many of which are outside of our control, and actual results could differ

materially from those discussed.

Forward-looking statements involve risks and uncertainties that could cause actual results or outcomes

to differ materially from those expressed therein.

We express our estimates, expectations, beliefs, and projections in good faith and

believe them to have a reasonable basis.

However, we make no assurances that management’s estimates, expectations, beliefs, or projections

will be achieved or accomplished.

These forward-looking statements are based on assumptions about many important factors that could cause

actual results to differ materially from those in the forward-looking statements.

We do not intend to update any forward-looking statements

even if new information becomes available or other events occur in the future, except as required by the federal securities laws.

Management’s Discussion and

Analysis of Financial Condition and Results of Operations

This information should

be read in conjunction with the financial statements and notes included in Item 1 of Part I of this Form 10-Q.

This Form 10-Q contains

“forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E

of the Exchange Act, and such forward-looking statements involve risks and uncertainties.

All statements (other than statements of historical

fact) included in this Form 10-Q that address activities, events or developments that may occur in the future, the Trust’s operations,

the Sponsor’s plans and references to the Trust’s future success and other similar matters are forward-looking statements.

Words such as “could,” “would,” “may,” “expect,” “intend,” “estimate,”

“predict,” and variations on such words or negatives thereof, and similar expressions that reflect our current views with

respect to future events and Trust performance, are intended to identify such forward-looking statements.

These forward-looking statements

are only predictions, subject to risks and uncertainties that are difficult to predict and many of which are outside of our control, and

actual results could differ materially from those discussed.

Forward-looking statements involve risks and uncertainties that could cause

actual results or outcomes to differ materially from those expressed therein.

We express our estimates, expectations, beliefs, and projections

in good faith and believe them to have a reasonable basis.

However, we make no assurances that management’s estimates, expectations,

beliefs, or projections will be achieved or accomplished.

These forward-looking statements are based on assumptions about many important

factors that could cause actual results to differ materially from those in the forward-looking statements.

We do not intend to update

any forward-looking statements even if new information becomes available or other events occur in the future, except as required by the

federal securities laws.

Organization and Trust Overview

23 unchanged sentences

On June 18, 2024 (the

“Seed Capital Purchase Date”), 21Shares US LLC, in its capacity as Seed Capital Investor, purchased the initial Seed Creation

“Seed Capital Purchase Date”), the Sponsor, in its capacity as Seed Capital Investor, purchased the initial Seed Creation

Baskets comprising 20,000 Shares (the “Initial Seed Creation Baskets”).

In its capacity as the Seed Capital Investor,

21Shares US LLC has acted as a statutory underwriter in connection with this purchase.

The total proceeds to the Trust from the sale of

the Initial Seed Creation Baskets were $340,739.

On June 18, 2024, the Trust purchased ether with the proceeds of the Initial Seed

Creation Baskets by transacting with an Ether Counterparty to acquire ether on behalf of the Trust in exchange for cash provided by 21Shares

US LLC in its capacity as Seed Capital Investor.

All ether acquired in connection with the Initial Seed Creation Baskets is held by the

ether Custodians.

the Sponsor has acted as a statutory underwriter in connection with this purchase.

The total proceeds to the Trust from the sale of the

Initial Seed Creation Baskets were $340,739.

On June 18, 2024, the Trust purchased ether with the proceeds of the Initial Seed Creation

Baskets by transacting with an Ether Counterparty to acquire ether on behalf of the Trust in exchange for cash provided by the Sponsor

in its capacity as Seed Capital Investor.

All ether acquired in connection with the Initial Seed Creation Baskets is held by the ether

The Trust’s investment

objective is to seek to track the performance of ether, as measured by the performance of the CME CF Ether-Dollar Reference Rate—New

York Variant, adjusted for the Trust’s expenses and other liabilities.

objective is to seek to track the performance of ether, as measured by the performance of the Index, adjusted for the Trust’s expenses

and other liabilities.

CF Benchmarks Ltd.

is the administrator for the Index (the

“Index Provider”).

is the Index Provider.

The Index is designed to reflect the performance of ether in U.S.

In seeking to achieve its investment

objective, the Trust holds ether at its Custodians and values its Shares daily based on the Index.

The Trust is a passive investment vehicle

and is not a leveraged product.

In seeking to achieve its investment objective, the Trust holds ether at its Custodians and values its Shares daily based on the Index.

The Trust is a passive investment vehicle and is not a leveraged product.

The Sponsor does not actively manage the ether held by the Trust.

5 unchanged sentences

in Creation Baskets on a continuous basis at the applicable NAV per Share on the creation order date.

The Trust pays the

unitary Sponsor Fee of 0.21% of the Trust’s ether holdings.

The Sponsor Fee is paid by the Trust to the Sponsor as

compensation for services performed under the Trust Agreement.

The Sponsor agreed to waive the entire Sponsor Fee for (i) a

six-month period which commenced on July 23, 2024 (the day the Trust’s Shares were initially listed on the Exchange), or (ii)

the first $500 million of Trust assets, whichever came first.

The six-month waiver period ended on January 23, 2025, at which time

the Sponsor began collecting the Sponsor Fee.

Except for during periods during which the Sponsor Fee is being waived, the Sponsor

Fee accrues daily and is payable in ether weekly in arrears.

The Administrator calculates the Sponsor Fee on a daily basis by

applying a 0.21% annualized rate to the Trust’s total ether holdings, and the amount of ether payable in respect of each daily

accrual is determined by reference to the Index.

The Trust pays the unitary

Sponsor fee of 0.21% of the Trust’s ether holdings.

The Sponsor fee is paid by the Trust to the Sponsor as compensation for services

performed under the Trust Agreement.

The Sponsor agreed to waive the entire Sponsor fee for (i) a six-month period which commenced on

July 23, 2024 (the day the Trust’s Shares were initially listed on the Exchange), or (ii) the first $500 million of Trust assets,

whichever came first.

The six-month waiver period ended on January 23, 2025, at which time the Sponsor began collecting the Sponsor fee.

Except for during periods during which the Sponsor fee is being waived, the Sponsor fee accrues daily and is payable in ether weekly in

The Administrator calculates the Sponsor fee on a daily basis by applying a 0.21% annualized rate to the Trust’s total

ether holdings, and the amount of ether payable in respect of each daily accrual is determined by reference to the Index.

The Trust incurred

Sponsor fees for the six-month period ended June 30, 2025 and for the period May 1, 2024 (initial seed creation date) through June 30,

2024 of $15,490 and $0, net of Sponsor fee waivers of $2,169 respectively.

The Trust is an “emerging

49 unchanged sentences

Results of Operations

For the Three Months ended on March 31, 2025

The Trust's net asset value decreased from $16,869,879

at December 31, 2024 to $8,403,421 at March 31, 2025.

The decrease in the Trust's net asset value was primarily driven by a decrease in

the price of ether from $3,340.57 as of December 31, 2024 to $1,827.55 as of March 31, 2025.

The decrease in the Trust's net asset value

was also attributable to a decrease in the number of outstanding Shares, which decreased 90,000 as a result of 520,000 shares being created

and 610,000 shares being redeemed during the quarter.

Net decrease in net assets

resulting from operations for the quarter ended March 31, 2025 was $9,861,010, resulting from a net change in unrealized loss on investment

in ether of $6,380,524, a net realized loss of $3,476,102 from ether sold for redemptions, and a net investment loss of $5,907 together

with an unrealized gain on the Sponsor Fee payable of $1,523.

Other than the net Sponsor Fee of $5,907, the Trust had no expenses during

For the Three Months ended on June 30, 2025

The Trust’s NAV increased from $8,403,421

on March, 31, 2025 to $23,002,554 on June 30, 2025.

The increase in the Trust’s NAV resulted primarily from an increase in the price

of ether of 37.64% (from $1,827.55 per ether on March 31, 2025 to $2,516.24 per ether on June 30, 2025) and a net increase of 910,000

in the number of shares outstanding from March 31, 2025 to June 30, 2025.

The Trust’s net increase in net assets resulting

from operations for the three months ended June 30, 2025 was $6,457,692.

This was the result of a change in unrealized appreciation on

investment in ether of $6,469,118, a net realized loss of $(320) on the sale of ether for purposes of distributing to the Sponsor as the

Sponsor’s fee.

The Trust’s expenses for the quarter were $9,583, relating to the Sponsor’s fees.

For the Six Months ended on June 30, 2025

The Trust’s NAV increased

from $16,869,879 on December 31, 2024 to $23,002,554 on June 30, 2025.

The increase in the Trust’s NAV resulted primarily from a

net increase of 820,000 in the number shares outstanding from December 31, 2024 to June 30, 2025.

The Trust’s net decrease

in net assets resulting from operations for the six months ended June 30, 2025 was $3,403,318.

This was the result of a change in unrealized

appreciation on investment in ether of $88,594, a net realized loss of $320 on the sale of ethers for purposes of distributing to the

Sponsor as the Sponsor’s fee, and net realized loss on investment in ether sold for redemptions of $3,476,102.

The Trust expenses

for the six-month period were $15,490, relating to the Sponsor’s fees.

For the Period May 1, 2024 (initial seed creation)

through June 30, 2024

As of June 30, 2024, the Trust had a net closing

balance of 100.0000 ether with a value of $342,300.

Net realized and change in unrealized gain on

investment in ether for the period May 1, 2024 (initial seed creation date) through June 30, 2024, was $1,561 which includes a net change

in unrealized appreciation on investment in ether of $1,561.

Net realized and unrealized gain on investment in ether for the period was

driven by ether price appreciation from $2,922.53 per ether as of May 1, 2024 (initial seed creation date) to $3,423.00 per ether as of

June 30, 2024.

Net increase in net assets resulting from operations was $1,561 for the period ended June 30, 2024, which consisted of

the aforementioned net realized and change in unrealized gain on investment in ether.

Liquidity and Capital Resources

The Trust is not aware

of any trends, demands, commitments, events, or uncertainties that are reasonably likely to result in material changes to its

liquidity needs.

The Trust’s only ordinary recurring expense is the fee paid to the Sponsor at an annual rate of 0.21% of the

Trust’s total ether holdings.

The Sponsor agreed to waive the entire Sponsor Fee for (i) a six-month period which commenced on

July 23, 2024 (the day the Trust’s Shares were initially listed on the Exchange), or (ii) the first $500 million of Trust

assets, whichever came first.

The six-month waiver period ended on January 23, 2025, at which time the Sponsor began collecting the

In exchange for the Sponsor’s fee, the Sponsor has agreed to assume the ordinary fees and expenses incurred by

the Trust, including but not limited to the following:

fees charged by Administrator, the Custodians, Transfer Agent and the

Trustee, the Marketing Fee, the Exchange’s listing fees, typical maintenance and transaction fees of the DTC, SEC registration

fees, printing and mailing costs, website fees, tax reporting fees, audit fees, license fees and expenses, up to $100,000 per annum

in ordinary legal fees and expenses.

The Sponsor bears expenses in connection with the Trust’s organization and initial

offering costs.

The Trust is not aware of

any trends, demands, commitments, events, or uncertainties that are reasonably likely to result in material changes to its liquidity needs.

The Trust’s only ordinary recurring expense is the fee paid to the Sponsor at an annual rate of 0.21% of the Trust’s total

ether holdings.

The Sponsor agreed to waive the entire Sponsor fee for (i) a six-month period which commenced on July 23, 2024 (the day

the Trust’s Shares were initially listed on the Exchange), or (ii) the first $500 million of Trust assets, whichever came first.

The six-month waiver period ended on January 23, 2025, at which time the Sponsor began collecting the Sponsor fee.

In exchange for the

Sponsor’s fee, the Sponsor has agreed to assume the ordinary fees and expenses incurred by the Trust, including but not limited

to the following:

fees charged by Administrator, the Custodians, Transfer Agent and the Trustee, the Marketing Fee, the Exchange’s

listing fees, typical maintenance and transaction fees of the DTC, SEC registration fees, printing and mailing costs, website fees, tax

reporting fees, audit fees, license fees and expenses, up to $100,000 per annum in ordinary legal fees and expenses.

The Sponsor bears

expenses in connection with the Trust’s organization and initial offering costs.

The Sponsor is not required

13 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis