Analysis of the Composition and Types of Ethereum ETFs

An Ethereum ETF (Exchange Traded Fund) is a financial instrument that allows investors to invest indirectly in Ethereum through the traditional stock market without having to hold the cryptocurrency directly. The following is a comprehensive analysis of the detailed classification, market products and core features of Ethereum ETFs:

 1. The main types of Ethereum ETFs

1.  Spot Ethereum ETF
   • Definition: Directly holding Ethereum tokens (ETH), the value of the fund is closely linked to the real-time price of Ethereum.
   • Benefits: Provides more accurate price tracking, typically at lower fees than futures ETFs, and eliminates the need to deal with the rollover costs of futures contracts.
   • Representative products: Grayscale Ethereum Trust (ETHE), BlackRock iShares Ethereum Trust (ETHA), etc.

  2. Futures Ethereum ETF

• Definition: Track price fluctuations by investing in Ethereum futures contracts, without directly holding ETH.
• Risk: Higher tracking error may occur due to contango, rollover costs and market manipulation.
• 代表产品：VanEck Ethereum Strategy ETF (EFUT)、Bitwise Bitcoin and Ether Equal Weight Strategy ETF (BTOP)。

 2. The main Ethereum ETF products in the current market

As of April 2025, multiple spot Ethereum ETFs have been approved in the United States, and here are the details of the core products:

1. Grayscale Ethereum Trust (ETHE)

• Type: Spot ETF (formerly a trust fund, converted to an ETF in July 2024).
•  Management fee: 2.50% (no fee reduction).
• Position size: The world's largest Ethereum fund, holding about 1,417,788 ETH, accounting for more than 2% of the total market capitalization.
• Features: There is a risk of a premium or discount between historical net worth and market price, but there is high liquidity.

2. Fidelity Ethereum Fund (FETH)

•  Type: Spot ETF.
•  Management fee: 0.25% (no management fee in 2024).
• Fund inflows: Net inflows of $297 million in the first week, with high market recognition.

3. BlackRock iShares Ethereum Trust (ETHA)

•  Type: Spot ETF.
• Management fee: 0.25% (0.12% for the first $2.5 billion in assets or first year).
• Holdings: Holds approximately 1,071,415 ETH and has $35.7 billion in assets under management.

4. VanEck Ethereum ETF (ETHV)

•  Type: Spot ETF.
• Management fee: 0.20% (no management fee for the first $1.5 billion in assets or first year).
• Dynamics: After its launch in July 2024, the trading volume exceeded $1 billion on the first day, but there was an outflow of funds later.

5. 21Shares Core Ethereum ETF (CETH)

•  Type: Spot ETF.
• Management fee: 0.21% (no management fee for the first 6 months or $500 million in assets).
• Features: Launched in partnership with ARK Invest, focusing on low-fee competition.

6. Franklin Ethereum ETF (EZET)

•  Type: Spot ETF.
• Management fee: 0.19% (no management fee for $10 billion of assets up to or before January 2025).
• Fund performance: The single-day net inflow reached US$2.06 million, and the market responded positively.

7. Bitwise Ethereum ETF (ETHV)

•  Type: Spot ETF.
• Management fee: 0.20% (no management fee for the first 6 months or the first $500 million in assets).
• Holdings: As of January 2025, it holds approximately 106,825 ETH.

8. Invesco Galaxy Ethereum ETF (QETH)

•  Type: Spot ETF.
•  Management fee: 0.25%.
• Advantage: Rely on Galaxy Digital's transaction execution capabilities to reduce tracking error.

 3. Cost structure and tracking error

1.  Comparison of management rates

   • Lowest rates: Franklin EZET (0.19%) and Grayscale Mini Trust (0.15%).
   • Highest Fee: Grayscale EHE (2.50%) due to legacy issues with the conversion of historical trust structures.
   • Fee reductions: Most ETFs offer preferential rates for the first year or before the asset threshold, such as FETH (no management fee in 2024).

2.  Source of tracking error

   • Spot ETFs: Mainly from management fees, liquidity differences, and custody costs, with typically a small margin of error (<0.5%).
   • Futures ETFs: Higher errors (e.g., about 1-2% annual error of about 1-2%) due to futures rollovers and market basis (spot and futures spreads).

 4. Investment advantages and risks

1.  advantage

   •  Convenience: Trade through a stock account without having to deal with a cryptocurrency wallet.
   •  Regulatory protection: Regulated by the SEC to reduce the risk of fraud.
   • Liquidity: High average daily trading volume, such as ETHE's first-week trading volume of more than $4.2 billion.

2.  risk

   • Market volatility: The price of Ethereum is highly volatile, which may affect the net value of the ETF.
   • Missing staking rewards: ETFs do not participate in Ethereum staking, and investors cannot earn income.
   • Regulatory uncertainty: The SEC's ongoing review of cryptocurrencies could impact ETF operations.

 5. Summary

Ethereum ETFs provide a compliant and convenient access to cryptocurrency investment for traditional investors. Spot ETFs have become the mainstream choice because they hold ETH directly, while futures ETFs are suitable for short-term speculation. Despite fee and tracking error differences, low-fee products (e.g., EZET, ETHV) and institutional-grade liquidity (e.g., ETHE, ETHA) remain in focus. Investors need to choose suitable ETF products based on risk appetite and market dynamics.