Grayscale launches Aave fund for Ethereum lending token

Asset manager Grayscale has launched a fund offering investors exposure to AAVE, the token behind Ethereum-centric decentralized lending protocol Aave and the 44th largest cryptocurrency by market capitalization.

The Grayscale Aave Trust allows investors to purchase stocks that track the asset’s price. It will operate as a closed-end fund, not the exchange-traded fund (ETF) that Grayscale is offering to Bitcoin and Ethereum investors after SEC approvals this year.

“Grayscale Aave Trust provides investors with exposure to a protocol that has the potential to revolutionize traditional finance,” Rayhaneh Sharif-Askary, head of product and research at Grayscale, said in a statement.

“By leveraging blockchain technology and smart contracts,” she continued, “Aave’s decentralized platform aims to optimize lending and borrowing while removing middlemen and reducing the need for judgment human”.

Aave is a project in the Challenge (decentralized finance). DeFi is the name given to protocols in the crypto industry that want to revolutionize the way traditional financial institutions like banks operate.

Such protocols offer lending and borrowing services via blockchain technology but are risky and experimental; hacks in space are common. However, Aave is one of the largest and most established DeFi protocols and is used by various large companies and banks. It has also been subject to extensive audits.

Grayscale was one of 10 asset managers that received the green light to launch a spot Bitcoin ETF in January. Later, in May, the Securities and Exchange Commission gave the green light to launch an Ethereum ETF, and these funds began trading in July.

Last month, Grayscale launched a new trust offering investors exposure to XRP, the seventh largest cryptocurrency by market capitalization. Grayscale also offers investors exposure to Bitcoin Cash, Filecoin, Chainlink, Litecoin and other assets through its trusts.

Edited by Andrew Hayward