SEC Filing Document

Company: Canary Staked TRX ETF
Ticker: 
CIK: 2064768
Filing Type: S-1
Document Type: S-1
Date Filed: 2025-04-18
Accession Number: 0001999371-25-004423
Exchange: 
SIC Code: 6221
SIC Description: Commodity Contracts Brokers & Dealers
URL: https://www.sec.gov/Archives/edgar/data/2064768/000199937125004423/canary-s1_041825.htm

Chunk 2 of 59
Word Count: 1373
Character Count: 8973

Document Content:

spot market prices from various digital asset trading platforms (“Constituent Platforms”). The Pricing Benchmark is calculated as of 4:00 p.m. Eastern time (“ET”). TRX is a digital asset. Like all digital assets, buying, holding and selling TRX is very different from buying, holding and selling more conventional investments like stocks and bonds. Stocks represent ownership in a company, entitling shareholders to a portion of the company’s profits. Bonds are debt instruments issued by corporations or governments, where the bondholder is a creditor to the issuer that is generally entitled to a stream of income payments. Ownership of stocks and bonds is typically recorded through a centralized system managed by brokers, custodians or clearinghouses. Ownership of TRX does not entitle its holders to any portion of a company’s profits or any stream of income payments. TRX is a decentralized digital asset and ownership of it is reflected on a decentralized ledger.

The
Trust provides investors with the opportunity to access the market for TRX through a traditional brokerage account without the potential
barriers to entry or risks involved with acquiring and holding TRX directly. The Trust will not use derivatives that could subject the
Trust to additional counterparty and credit risks. The Sponsor believes that the design of the Trust will enable certain investors to
more effectively and efficiently implement strategic and tactical asset allocation strategies that use TRX by investing in the Shares
rather than purchasing, holding and trading TRX directly.

The
Shareholders of the Trust take no part in the management or control, and have no voice in, the Trust’s operations or business. Except
in limited circumstances, Shareholders will have no voting rights under the Trust Agreement (as defined below).

The
Trust, the Sponsor and the Trust’s service providers will not loan or pledge the Trust’s assets, nor will the Trust’s
assets serve as collateral for any loan or similar arrangement.

The
Trust will not utilize leverage, derivatives or any similar arrangements in seeking to meet its investment objective.

[The
Trust intends to establish a program to stake a portion of the Trust’s assets through one or more staking infrastructure providers
(each a “Staking Provider”). The Staking Provider will provide hardware, software and services necessary to enable the Trust
to establish validator nodes and stake the Trust’s TRX on the Tron Network. As a result of any staking activity in which the Trust
may engage, the Trust expects to receive certain staking rewards of TRX, which may be treated for federal income tax purposes as income
to the Trust. The Staking Provider exercises no discretion as to the amount the Trust’s TRX to be staked or timing of the staking
activities (other than as is incidental in establishing or deactivating validator nodes). The TRX Custodian will maintain exclusive possession
and control of the private keys associated with any staked TRX at all times. Staking activity comes with a risk of loss of TRX, including
in the form of penalties related to delegating votes to underperforming or untrustworthy “Super Representatives” (described
below). Additionally, as part of the “voting” and “withdrawing” processes of TRX staking, any staked TRX will
be inaccessible for a period of time determined by a range of factors, resulting in certain liquidity risks that the Sponsor will manage.]

The Tron Network and TRX

The Tron Network is a decentralized
blockchain platform launched in 2017 by entrepreneur Justin Sun. It is designed to facilitate high-speed, low-cost transactions and support
the creation of decentralized applications (“dApps”), with a particular emphasis on content sharing and entertainment services.
The Tron Network aims to address the scalability and cost limitations of earlier blockchain infrastructures by implementing a delegated
proof-of-stake (“DPoS”) consensus mechanism, enabling it to process up to 2,000 transactions per second (“TPS”),
making it suitable for applications requiring high throughput, such as gaming and multimedia platforms.

The Tron Network utilizes
a DPoS model in which TRX token holders vote to elect 27 super representatives (“Super Representatives”) who are responsible
for validating transactions and producing blocks. These Super Representatives are elected every six hours, and TRX holders can vote by
staking their tokens, thereby participating in the Tron Network’s governance. This mechanism enhances scalability and efficiency,
aligning validator incentives with network security.

TRX serves multiple functions
within the ecosystem. It is used to pay for transaction fees, including bandwidth and energy, required to execute smart contracts and
transfer assets on the Tron Network. TRX holders can stake their tokens to participate in governance decisions by voting for Super Representatives,
influencing the network’s development and operational parameters. Additionally, TRX acts as a medium of exchange within dApps built
on the Tron platform, facilitating various transactions and services.

TRX has diverse utility across
the Tron ecosystem. In the DeFi space, TRX can be used in applications such as lending, borrowing and yield farming, leveraging the network’s
high throughput and low transaction fees. The Tron Network supports the creation and trading of non-fungible tokens (“NFTs”),
allowing artists and creators to mint and sell digital assets in a decentralized marketplace. The gaming industry benefits from the network’s
capabilities, with TRX used for in-game purchases, rewards and other economic activities within blockchain-based games. Additionally,
TRX can be utilized in social media and content-sharing platforms, enabling direct compensation for content creators without intermediaries.

The Tron Network employs advanced
cryptographic techniques to ensure the security, integrity, and confidentiality of transactions. Its decentralized architecture, supported
by the DPoS consensus mechanism, contributes to its resilience against attacks and censorship. The Tron Network is also designed to be
interoperable with other blockchain systems, facilitating the seamless transfer of assets and data across different platforms, thereby
enhancing its versatility and integration within the broader blockchain ecosystem.

For more information on TRX
and the Tron Network, see “TRX, TRX Markets, and Regulation of TRX” below.

The Trust’s Investment
Objective

The
Trust’s investment objective is to seek to provide exposure to the price of TRX held by the Trust, less the expenses of the
Trust’s operations and other liabilities. In seeking to achieve its investment objective, the Trust will hold TRX and
establish its NAV by reference to the Pricing Benchmark. The Pricing Benchmark is calculated by the Benchmark Provider, a financial
data website integrating spot market prices from various Constituent Platforms. All of the Trust’s TRX will be held by the TRX
Custodian.

The Pricing Benchmark

The
Pricing Benchmark is calculated by the Benchmark Provider, a financial data website integrating spot market prices from various Constituent
Platforms. All of the Trust’s TRX will be held by the TRX Custodian. The Trust uses the Pricing Benchmark to calculate its
daily NAV. The Pricing Benchmark will provide a daily, 4:00 p.m. ET reference rate of the U.S. dollar
price of one TRX that may be used to develop financial products. For more information on the Pricing Benchmark, see “The Trust
and TRX Prices” below.

Summary of Risk Factors

investment in the Trust involves risks described in the section below entitled “Risk Factors” and elsewhere in this
Prospectus. Some of these risks are summarized below.

Risks
associated with the Tron Network and TRX

TRX
is a relatively new technological innovation with a limited history. There is no assurance that usage of the Tron Network or TRX will
continue to grow. A contraction in the use or adoption of TRX may result in increased volatility or a reduction in the price of TRX, which
could adversely impact the value of the Shares. Sales of TRX that have been newly released from escrow may cause the price of TRX to decline,
which could negatively affect an investment in the Shares. TRX markets have a limited history, TRX trading prices have exhibited high
levels of volatility, and in some cases such volatility has been sudden and extreme. Because of such volatility, Shareholders could lose
all or substantially all of their investment in the Trust. Regulation of the use of TRX and the Tron Network continues to evolve both
in the United States and in foreign jurisdictions, which may restrict the use of TRX or otherwise impact the demand for TRX. Disruptions
at digital asset trading platforms could adversely affect the availability of TRX and the ability of Authorized Participants to purchase
or sell TRX and, therefore, their ability to create and redeem Shares.