Canary’s Proposed INJ ETF Would Add Staking Rewards to Fund Value

Canary Capital’s proposed Injective (INJ) exchange-traded fund would route staking proceeds back into the trust, giving shareholders exposure to rewards through the fund’s holdings instead of direct cash distributions. The structure makes custody, fees and redemption liquidity central to how those rewards reach investors.

Under the plan for the Canary Staked INJ ETF, third-party staking providers would delegate the trust’s tokens to validators on the Injective network. The custodian would retain control of the private keys, while the fund would not run a validator itself. Delegation allows token holders to assign INJ to validators that confirm transactions on the network. The arrangement separates staking operations from control of the fund’s keys.

Staking rewards are paid in INJ and can vary with network conditions and validator performance. After fees shared among the staking provider, sponsor and custodian, net proceeds would go to the fund’s custody wallets. Those rewards would count toward daily net asset value (NAV), the fund’s measure of asset value, and generally be staked again. The fund would add INJ to its holdings rather than make cash payments to shareholders.

The proposal’s 90% staking target and reserve plan calls for at least 90% of holdings to be staked under normal conditions, with some INJ held back for redemptions, expenses or other protections. The reserve would leave some tokens available to meet redemptions without waiting for staked assets to become transferable.

Unstaking on Injective takes 21 days. During that unbonding period, tokens cannot be moved and do not earn rewards, so a reserve can provide liquidity while other assets remain locked. Tokens delegated for rewards are therefore not immediately available for transactions or redemptions.

The process also carries slashing risk. A validator that misbehaves or remains offline for an extended period can trigger a penalty against staked tokens, and recovery of a resulting loss is not guaranteed. Reward amounts are not assured, the proportion of holdings staked may change, and staking may not continue throughout the fund’s life.

The staking outline describes a proposed fund structure; it does not establish regulatory approval or a trading start.