Grayscale Launches Aave Fund for Ethereum Lending Token

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

The Grayscale Aave Trust allows investors to buy shares that track the price of the asset. It will operate like a closed-end fund, not an exchange-traded fund (ETF) that Grayscale offers Bitcoin and Ethereum investors following SEC approvals this year.

"Grayscale Aave Trust gives investors exposure to a protocol with the potential to revolutionize traditional finance," Rayhaneh Sharif-Askary, Grayscale's head of product and research, 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 intermediaries and reducing reliance on human judgment."

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

Such protocols offer lending and borrowing services via blockchain technology but are risky and experimental; hacks in the space are common. However, Aave is one of the biggest and most established DeFi protocols and is used by a variety of major companies and banks. It has also been extensively audited.

Grayscale was one of the 10 asset managers that received the green light to launch a spot Bitcoin ETF in January. Later, in May, it got the thumbs up from the Securities and Exchange Commission to release an Ethereum ETF, and such funds began trading in July.

Last month, Grayscale launched a new trust giving investors exposure to XRP, the seventh biggest cryptocurrency by market cap. Grayscale also gives investors exposure to Bitcoin Cash, Filecoin, Chainlink, Litecoin, and other assets via its trusts.

Edited by Andrew Hayward