Grayscale Launches AAVE Fund, Price Recovery Ahead?

Grayscale Investments has added a new product to its growing list of crypto investment funds, offering investors exposure to Aave (AAVE). The fund, known as the Grayscale Aave Trust, marks another move by the asset manager to expand its lineup of investment products related to the decentralized finance (DeFi) space.

About Grayscale’s AAVE Fund

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

“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,” he added, according to a CoinDesk report.

This announcement follows the recent launch of Grayscale’s Avalanche Trust, which offers exposure to the Avalanche (AVAX) token, signaling the firm’s continued interest in expanding its suite of products. Grayscale now offers more than 20 different cryptocurrency investment vehicles.

These include its Grayscale Bitcoin Trust (GBTC) and the Grayscale Ethereum Trust (ETHE). Moreover, the introduction of new funds comes on the heels of the firm’s successful launch of spot Bitcoin ETFs in January, attracting significant investor interest in publicly traded crypto products.

Whilst, Aave, a decentralized lending platform built on the Ethereum blockchain, allows users to lend and borrow cryptocurrencies through automated processes. Moreover, by using tokens as collateral, Aave enables borrowing without the need for traditional financial intermediaries. The platform has grown in prominence, becoming the largest crypto lending protocol by total value locked (TVL) of $11.69 billion, according to analytics from DeFiLlama.

Though AAVE’s market capitalization currently stands at around a modest $2.11 billion, the protocol’s innovative approach to lending has positioned it as a key player in the DeFi space. Thus, investors are increasingly drawn to Aave’s potential to disrupt traditional finance by offering a decentralized alternative to traditional lending services.

AAVE Price to Recover?

The introduction of the Grayscale Aave Trust may also have implications for AAVE price, which has seen some volatility in recent months. While AAVE price currently lags behind its all-time highs, renewed institutional interest in the token driven by products like Grayscale’s fund could prompt a recovery.

At press time, AAVE price traded at $141.54, rallying 1.10% on Thursday, October 3. While the gain is modest, it is still significant considering that the token was earlier down over 3.50% today. However, the new AAVE fund announcement sent to a high of $143.73, marking the beginning of a rebound already.

Also, in the 1-hour frame, AAVE surged by 2.44%. It is a substantial recovery, considering the token has lost nearly 16% in the last seven days. Moreover, as institutional interest in the newly-launched AAVE fund surges, it could impact the price positively as more liquidity flows in.

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