Grayscale Joins Bitwise in Race for First US AAVE ETF

Grayscale has entered the race to launch the first AAVE exchange-traded fund (ETF) in the United States, filing paperwork on February 13 to convert its AAVE trust into an ETF. This move puts Grayscale in direct competition with Bitwise, which filed for 11 separate funds in December, giving it a two-month head start in the regulatory review process.

The native token of the Aave protocol, the largest decentralized lending platform in DeFi, AAVE has a market capitalization of approximately $1.8 billion and was trading at $119, up 9% on the day. Despite recent gains, AAVE's current price represents an 82% decline from its all-time high of $661.69 in April 2021.

Grayscale's proposed AAVE ETF would charge a 2.5% sponsor fee on net asset value, payable in AAVE tokens. Coinbase would serve as both custodian and prime broker for the fund, with plans to list the ETF on the NYSE Arca market. Grayscale has successfully converted multiple closed-ended trusts into ETFs, starting with its spot Bitcoin fund, setting a precedent that enabled other spot Bitcoin ETFs to launch in U.S. markets.

Investment products featuring AAVE already exist in European markets, including the 21Shares Aave ETP and Global X Aave ETP. Additionally, Grayscale filed last month to convert its NEAR-linked closed-end trust into an ETF, shifting it from over-the-counter trading to NYSE Arca listing. The NEAR Trust held approximately $900,000 in assets at the time of the announcement.