Grayscale, an asset management firm, has launched a new fund offering investors exposure to AAVE, the governance token of the decentralized finance (DeFi) platform Aave. Aave, ranked as the 44th largest cryptocurrency by market capitalization, operates on the Ethereum blockchain and facilitates lending and borrowing services through decentralized smart contracts.
The Grayscale Aave Trust operates similarly to a closed-end fund, allowing investors to buy shares that track the price of AAVE without directly holding the cryptocurrency. Unlike exchange-traded funds (ETFs) that Grayscale has launched for Bitcoin and Ethereum, this new trust focuses exclusively on Aave. Rayhaneh Sharif-Askary, Grayscale’s head of product and research, emphasized Aave’s potential to revolutionize traditional finance, stating that the platform aims to optimize lending and borrowing processes while eliminating intermediaries.
Aave is a key player in the DeFi industry, renowned for its decentralized protocol that eliminates the need for traditional banking systems and manual oversight. Despite the risks associated with DeFi, such as frequent hacks, Aave has gained credibility through rigorous audits and usage by leading financial institutions.
This launch follows a series of similar moves by Grayscale, which has expanded its crypto investment offerings this year. After securing approval from the U.S. Securities and Exchange Commission (SEC) to offer spot Bitcoin and Ethereum ETFs, the firm has continued to develop trusts for various cryptocurrencies. In addition to Aave, Grayscale recently launched a trust for XRP, the seventh largest cryptocurrency, and provides exposure to other assets like Bitcoin Cash, Filecoin, Chainlink, and Litecoin.