Company: OSOL
Filing Date: 2025-10-22
Form Type: S-1
Source: 0001493152-25-018952
Chunk: 83

Company: Osprey Solana Trust
Filing Date: 2025-10-22
Form: S-1
Chunk 83
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 As a result, there is currently no automatic slashing in the Solana Network. Rather, for regular consensus, after a safety violation, the Solana Network will halt. The validators will analyze the data prior to the halt to determine who was responsible and propose that the stake of the malicious actors responsible for the safety violation should be slashed after restart, typically 100%. Automatic slashing (i.e., slashing functionality that is applied by the protocol’s code) is expected to be introduced in the future.

There can be no guarantee that slashing penalties and resulting losses will not occur as a result of the activities of a Staking Provider. Furthermore, a Staking Provider’s liability to the Trust is expected to be limited, and a Staking Provider may lack the assets or insurance in order to support the recovery of any losses incurred. While the staking arrangements may provide for indemnification up to a specified cap, slashing insurance or other reimbursement programs, there can be no guarantee that the Trust would recover any of its staked assets, or the value thereof, if it is subject to penalties imposed by the Solana Network.

Staked SOL tokens will be inaccessible for a variable period of time, determined by a range of factors, which could result in certain liquidity risk to the Trust.

Under current Solana Network protocols, staked SOL tokens are permitted to be un-staked by the holder of the private keys for the withdrawal address of such SOL tokens. However, as part of the “activating” and “exiting” processes of staking, staked SOL tokens will be inaccessible for a variable period of time determined by a range of factors, including network congestion, resulting in certain liquidity risks that the Sponsor plans to manage. “Activation” is the funding of a validator to be included in the active set, thereby allowing the validator to participate in the Solana Network’s proof-of-stake consensus protocol. “Exit” is the request to exit from the active set and no longer participate in the Solana Network’s proof-of-stake consensus protocol. As part of these “activating” and “exiting” processes of staking on the Solana Network, any staked SOL will be inaccessible for a period of time before fully unbonded. The duration of activating and exiting periods are dependent on a range of factors, including network conditions. However, depending on demand, unbonding can take between hours, days or weeks to complete, although, more recently, it generally lasts 0 to 2 days. This can result in certain liquidity risk to