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Grayscale picked out Aave (AAVE) for its next trust-based product. The new investment vehicle is targeting accredited investors and will be distributed through private placement.
Grayscale has added AAVE to its portfolio of products, in a new Trust investment vehicle targeted for private placement. Grayscale has added crypto coins and tokens from several cycles, including now almost dead chains.
The addition of Aave taps the latest growth in DeFi, as the protocol has attracted the most value for collateralized crypto lending. AAVE gained exposure in 2024, as it was one of the few tokens to outperform BTC. AAVE also rose from beyond the top 100 tokens to position 38 based on market capitalization of $2.12B.
Most of the Grayscale products are OTC-traded and have mass availability. Niche assets and more volatile projects have been selected for private placement only. Those Trusts include XRP, SUI, Stacks, NEAR, MakerDAO, a basket AI Trust, Bittensor (TAO), and Avalanche (AVAX).
The Trust is available for daily subscriptions for institutions and eligible private investors. Grayscale has picked accredited investors for their riskier products, as the definition is based on available income and available liquid assets.
With the addition of Aave, Grayscale spans a total of 24 products for coins, tokens, and combined baskets of crypto. On the first day of launch, the Aave Trust started with $151,281.10 assets under management and a price per share of $13.88. The Trust contains 10% of the token’s value and trades at a slight discount to spot AAVE markets.
Grayscale started buying AAVE
Soon after the launch of the Trust and the initial announcement, Grayscale started adding AAVE to its publicly known addresses. The fund made a small test purchase of 10.491 AAVE from Coinbase. For now, Grayscale is not a significant buyer of AAVE, but the new addition gives exposure to the DeFi space for mainstream investors.
Grayscale rapidly increases its token balances after the launch of new products. In the case of AVAX, the Trust acquired more than 133K tokens after demand started growing. AAVE may see a similar growth in new reserves. AVAX grew its reserves in the first few weeks after its launch.
The asset that Grayscale has been shedding most actively is Ethereum (ETH). The fund is down to 2.08M ETH, as it managed to realize profits from coins acquired as low as $200 per ETH. Grayscale stopped selling its BTC reserves when it switched over to an ETF.
Grayscale has popularized BTC and ETH among mainstream investors. However, the fund’s selling has also hurt the Ethereum ETF market, due to large-scale selling soon after the fund launched. Instead of rising, ETH actually wiped out value after the ETF launch.
AAVE tokens pressured by market correction
After the news, AAVE traded at $141.10, still depressed after the recent market correction. AAVE stopped its trek toward $200 after recently overcoming the $170 level.
The Aave protocol still sits on $19.50B in value locked, taking over MakerDAO after its rebranding into Sky. Aave already has versions on 13 chains, bringing value inflows to Ethereum and L2 platforms. The AAVE token currently derives its value from speculation and overall bullish expectations for DeFi. There are also expectations the protocol may start a token burn to decrease supply and reward holders.
Aave remains a risky protocol, as it has seen value outflows during bear markets. The success of Aave also depends on the overall market trend, especially for Ethereum. Aave is also slowly growing the supply of its native stablecoin, GHO, which is already at 153M tokens. GHO will have a role as a collateral asset, as well as for buybacks. The expectation for GHO is to grow its supply above 175M tokens before starting the buybacks.
AAVE still trades within a relatively small range and is seen as capable of a larger breakout if the altcoin market begins in earnest. During this bull cycle, Aave is much better positioned, with more available chains and more sophisticated DeFi investors.
Aave is also a fat-fee protocol, with earnings as high as $4.55M in June. For September, Aave posted a loss of $396.08K.
Cryptopolitan reporting by Hristina Vasileva