Grayscale Launches Aave Trust, Expanding Investment Opportunities in Decentralized Finance

Grayscale has just launched a new fund that gives investors a chance to get involved with AAVE. This is the token tied to Aave, a decentralized lending platform built on Ethereum. Aave is currently the 44th largest cryptocurrency by market cap.

The Grayscale Aave Trust allows people to buy shares that track the price of AAVE. It works like a closed-end fund, not like an exchange-traded fund (ETF), which Grayscale has offered for Bitcoin and Ethereum after getting approvals from the SEC this year.

Rayhaneh Sharif-Askary, Grayscale's head of product and research, said, “Grayscale Aave Trust gives investors exposure to a protocol with the potential to revolutionize traditional finance.”

She added, “By leveraging blockchain technology and smart contracts, Aave's decentralized platform aims to optimize lending and borrowing while removing intermediaries and reducing reliance on human judgment.”

Aave is part of the decentralized finance (DeFi) space. DeFi refers to the protocols in the crypto world that aim to change how traditional financial institutions, like banks, operate.

These protocols offer lending and borrowing services using blockchain technology. However, they can be risky and experimental. Hacks in this space are not uncommon. Still, Aave stands out as one of the most established DeFi protocols, used by major companies and banks. Plus, it has undergone extensive audits.

In January, Grayscale was one of the ten asset managers that received approval to launch a spot Bitcoin ETF. Then, in May, they got the green light from the SEC to roll out an Ethereum ETF, which started trading in July.

Last month, Grayscale also introduced a new trust that gives investors exposure to XRP, the seventh-largest cryptocurrency by market cap. They also provide access to Bitcoin Cash, Filecoin, Chainlink, Litecoin, and other assets through their various trusts.

On another note, Bitcoin dipped just below $60,000 on Thursday morning after two days of outflows from U.S. spot Bitcoin ETFs. However, by the time this was published, Bitcoin's price had bounced back to around $61,000. It remained stable for the day, though it was down 4.5% for the week, according to CoinGecko.

In a note shared with Decrypt, Standard Chartered suggested that while Bitcoin may not be seen as a safe-haven asset during current geopolitical tensions, a dip below $60,000 “should be bought into.”

Meanwhile, Ethereum's volatility has been outpacing Bitcoin's. This gap has widened recently as traders prepare for the upcoming U.S. election in November. The implied volatility for 30-day at-the-money Ethereum contracts compared to Bitcoin has increased to nearly 7%, according to Nick Forster, founder of the DeFi derivatives protocol Derive.

By the way, "at-the-money" refers to an option contract where the strike price is very close to the current market price of the underlying asset.

In other news, Franklin Templeton has expanded its blockchain fund to include Aptos. The well-known asset manager announced that it has moved its Nasdaq-listed On-Chain U.S. Government Money Fund (FOBXX) to the Aptos blockchain. They called this a “massive step in the right direction” for creating a truly decentralized and accessible financial future. Aptos supports APT, which is the 30th largest digital coin by market cap. This network was founded by part of the team behind Meta's failed Diem project.