Grayscale Launches DeFi Fund for Institutions

Chris Williams

Jul. 19, 2021

Grayscale is launching a new fund focusing on the emerging decentralized finance sector.

Grayscale Launches DeFi Fund for Institutions

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Asset management giant Grayscale is doubling down on DeFi.

Grayscale Unveils DeFi Fund

Grayscale Investments is launching a new diversified fund focusing on DeFi.

The firm’s CEO Michael Sonnenshein announced the update on CNBC’s Squawk Box Monday. He explained that the growing demand for DeFi assets had inspired Grayscale’s decision to launch a new index and fund.

The fund is Grayscale’s 15th investment offering and second diversified fund (it runs another diversified fund called the Digital Large Cap Fund, which was recently approved to become an SEC-reporting company).

As of Jul. 1, the index tracked 10 so-called DeFi “blue chips”: Uniswap (UNI), Aave (AAVE), Compound (COMP), Curve (CRV), MakerDAO (MKR), SushiSwap (SUSHI), Synthetix (SNX), Yearn Finance (YFI), UMA Protocol (UMA) and Bancor (BNT). The index was most heavily weighted to Uniswap, which had a 49.95% allocation.

In a press release, Sonnenshein said:

“The emergence of decentralized finance protocols provide clear examples of technologies that can redefine the future of the financial services industry. We’re proud to offer investors exposure to DeFi through Grayscale’s trusted, secure, and industry-leading investment product structures.”

The DeFi space has been hit hard by the market’s downturn in recent weeks. Many tokens have been trading 70% off their highs since prices plummeted in mid-May. Nonetheless, with over $55 billion locked in DeFi protocols on Ethereum, the fast-growing space has shown early promise.

Grayscale is a behemoth in the cryptocurrency space, holding more than 650,000 Bitcoin under management. It’s best known for its GBTC product, which gives accredited investors a way to gain exposure to the leading cryptocurrency.

Grayscale is hoping to convert GBTC into a Bitcoin ETF. To help with that, it recently enlisted BNY Mellon as an asset servicing provider. Now, with the news of a move into DeFi, it seems the leading crypto firm is broadening its horizons.

Disclosure: At the time of writing, the author of this feature owned ETH, ETH2X-FLI, AAVE, SUHI, SNX, CRV, and several other cryptocurrencies. They also had exposure to UNI, COMP, MKR, YFI, and BNT in a cryptocurrency index.

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