ETF

Authorized Participant 4

Authorized Participants have the right (but not the obligation) to create and redeem shares of ETF. APs may only create shares by delivering a "creation basket" of Ether in the ratio of 1ETH:10000ETF (or 0.0001ETH:1ETF) to the AP smart contract. Similarly, they may only redeem shares by delivering a "redemption basket" of ETF to the AP smart contract in the same ratio. This functions to provide crucial liquidity to the market for ETF. Whenever shares of ETF begin trading at a premium on the secondary market (i.e. above the NAV of 0.0001 ETH per share), APs can provide liquidity by creating and selling new shares. In doing so, they take advantage of an arbitrage opportunity. Alternatively, whenever shares of ETF trade at a discount (i.e. below the NAV of 0.0001 ETH per share), APs can purchase shares on the secondary market and redeem them to take advantage of the same arbitrage opportunity.