Grayscale Launches New DeFi Fund, Tracking an Index of 10 DeFi Tokens

Key highlights:

  • Grayscale is launching a new investment product designed to provide investors exposure to DeFi
  • The fund tracks an index of 10 DeFi tokens created at CoinDesk
  • As of July 1, UNI had the largest weighting in the index at almost 50%

Grayscale launches new DeFi fund

Leading cryptocurrency asset manager Grayscale Investments is launching a new product called the Decentralized Finance (DeFi) Fund to allow investors to get exposure to DeFi. Grayscale CEO Michael Sonnenshein shared the news in an appearance on CNBC’s Squawk Box, where he said:

“I think for us, we’re always trying to broaden access to the digital asset market for investors and certainly, there is interest from a broad base of Grayscale’s existing and prospective investors in DeFi. You know, DeFi is really traditional financial services meeting decentralization.”

The new product uses a DeFi index created by CoinDesk, a company also owned by Grayscale’s parent company Digital Currency Group. Per CoinDesk, the index is heavily weighted towards Uniswap’s UNI (49.95% as of July 1), with AAVE, COMP, CRV and MKR also having weightings of over 5%. The index also contains SUSHI, SNX, YFI, UMA and BNT. 

DeFi tokens have struggled in the last week, alongside the cryptocurrency market at large. The market capitalization of the DeFi sector has declined by almost 18% in the last 7 days.

In a press release, Grayscale says that it plans to make the product quoted on a secondary market, although it makes no guarantees that this will actually happen. Grayscale’s investment products are designed with a four-stage lifecycle in mind – the Decentralized Finance Fund is currently in its first stage (private placement), with the ultimate goal being a conversion into an exchange-traded fund.

The planned lifecycle of Grayscale’s investment products. Image source: Grayscale Investments Medium

As of July 16, Grayscale had a total AUM of $28 billion. The vast majority of the company’s assets under management is taken up by their flagship Grayscale Bitcoin Trust, which held $20.6 billion worth of assets. The firm’s second largest product is its Grayscale Ethereum Trust, which had an AUM of $6 billion. 

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