Wall Street’s ETH Gateway is Surging

Hello Defiers! Here’s what’s going on in DeFi,

Grayscale investment trust shows Wall Street is buying up ETH
Aave launches a flash-loan powered V2 to make DeFi more seamless
Nexus Mutual now provides cover for centralized exchanges
A deeper dive into Yearn’s merger spree

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Wall Street’s ETH Gateway is Getting Ahead of Itself Again

By Christopher Attard

Grayscale’s ether-based investment vehicle ETHE is surging above ETH itself as institutional appetite for crypto increases.

At the time of publishing, Grayscale’s Ethereum Trust ticker ETHE, has doubled in the past month, while its underlying cryptocurrency ETH gained by about half as much, or 55%, in that same period.

Shares in ETHE are trading at a 98% premium to the fund’s net asset value. Ether holdings per share in the fund were worth $55.8, while market price per share was at $109$. That gap is near the widest since July this year.

How do ETHE and GBTC compare?

Meanwhile, Grayscale’s Bitcoin Trust ticker, GBTC, has climbed about 54% in the past month, while the underlying asset rose by 40% in that same time frame. At the time of writing, GBTC was trading at a 27% premium to its NAV.

The difference between premiums suggests that institutional investors are looking at Ethereum as potentially having more upside relative to bitcoin. In this most recent run-up, bitcoin already crossed its all-time high, while ether still has 130% to go before reaching 2017 levels.

That said, perhaps the Bitcoin - Ethereum premium discrepancy is best explained by institutional investor expectations in light of this fact.

$10 billion AUM

Grayscale inflows have surpassed $10 billion, bringing the cryptocurrency firm’s assets under management to all-time highs with GBTC and EETH products leading the way

The firm offers various crypto products and the most popular by far are the Grayscale Bitcoin Trust (GBTC) at $10.3 billion and the burgeoning Ethereum Trust (ETHE) with $1.6 billion aum.

The company announced that it now holds over 500,000 physical bitcoins stored on behalf of investors.

Grayscale Surpasses $10 Billion in Crypto Under Management With Over 500,000 BTC in Bitcoin Trust

In the third quarter of 2020, Grayscale set record after record with respect to capital inflows, totaling $1.05 billion – 81% of which came from institutional investors such as hedge funds and family offices.

The development is especially notable due to the increasing need and interest among institutions to diversify their portfolios within the cryptocurrency space. Indeed, Grayscale’s ETHE is second only to bitcoin, with the interest being fuelled by a budding decentralized finance (DeFi) sub-sector built on Ethereum.

Grayscale’s Ethereum Trust is designed to be a passive investment vehicle for investors to gain exposure to ETH in the form of a security. The primary reason for its popularity is the ease of access to purchasing the financial instrument, since regulatory and technical oversight is carried out by the Fund not by the investor.

ETH/BTC rebounds and stalls ahead of ETH 2.0 launch

Not dissimilar to GBTC’s popularity, Grayscale’s Eth trust is shaping up to be one of the largest aggregators of Ethereum in the entire cryptocurrency ecosystem just as interest climbs after the successful launch of Ethereum 2.0.

Indeed, Ethereum 2.0 has been the talk of the town in recent weeks, in large part due to much the anticipated shift from proof of work (PoW) to proof of stake (PoS). ETH holders with a minimum of 32 ETH are now able to earn rewards from annualized interest on their wealth denominated in Ethereum.

Clearly, the ambitious upgrade is drawing some institutional interest – in part due to its different value proposition to bitcoin and financial products such as Grayscale’s Ethereum Trust.

Ethereum has historically traded below bitcoin in terms of market capitalization for much of its history. However, given that ETH 2.0, investors are eying a potential surge in interest sometime within this bull market.

Just last week, Ethereum seemingly ‘bottomed out’ when measured against bitcoin, strongly rebounding to the 0.033 Satoshi level before a market-wide correction ensued.

For institutional investors, the value propositions for both Bitcoin and Ethereum are clearly second to none in the crypto ecosystem. On the one hand, bitcoin is seen as a store of wealth and a replacement for gold, and on the other Ethereum represents a budding financial sector built solely on Ethereum protocols.

The pieces are set and the game is in play.

Christopher Attard is a journalism and content specialist who covers bitcoin and crypto markets.

Aave Aims for a Seamless DeFi With Flash Loan-Driven V2

Aave, the third-largest DeFi lending protocol by assets, today unveiled its V2 revamp, where it leverages flash loans to make DeFi more seamless and composable.

Aave’s V2 includes several enhancements of its lending products, many of which are powered by flash loans. Flash loans don’t require any initial capital as long as the they’re paid back within the same blockchain block. Flash loans on Aave, which this month crossed the $1B mark, have been often behind financial exploits to DeFi protocols. Aave’s upgrade shows other ways flash loans can be used by investors.

👉 Read the story on thedefiant.io

Nexus Mutual Offers Cover on Centralized Exchanges

By Cooper Turley

Cryptocurrency investors are now able to buy insurance on centralized exchange deposits via Nexus Mutual.

Mutual members who have verified their identity with Nexus can purchase insurance claims on select centralized custodians including Celsius, BlockFi, Nexo, inLock, Ledn and Hodlnaut.

👉 Read the story on thedefiant.io

Here’s a Breakdown of Yearn Finance’s Latest Mergers

Yearn Finance has partnered up with at least six different DeFi platforms in the past couple of weeks. Rather than combining into one giant DeFi conglomerate, at least initially, they will be leveraging each other’s products in a symbiotic type of relationship. Here are the stories you need to get caught up on the three latest mergers, by Sydney Lai.

👉 Read the stories in thedefiant.io:

Visa Partners With Ethereum Digital-Dollar Startup That Raised $271 Million: Forbes

Visa said it is connecting its global payments network of 60 million merchants to the USDC, developed by Circle Internet Financial on the Ethereum blockchain, Forbes reported. Circle and Visa will work to help select Visa credit card issuers start integrating the USDC software into their platforms and send and receive USDC payments. Visa itself won’t custody the digital currency.

S&P Dow Jones Indices to Launch Cryptocurrency Indexes in 2021: Reuters

S&P Dow Jones Indices, a division of financial data provider S&P Global Inc, said on Thursday that it will launch cryptocurrency indices in 2021, making it the latest major finance company to enter the nascent asset class, Reuters reported.

The Defiant is a daily newsletter focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money.

About the founder and editor: Camila Russo is the author of The Infinite Machine, the first book on the history of Ethereum, and was previously a Bloomberg News markets reporter based in New York, Madrid and Buenos Aires. She has extensively covered crypto and finance, and now is diving into DeFi, the intersection of the two.