Even more fund managers court DeFi as new institutional fund and index hits the streets
A subsidiary of a New York-based venture capital company which invests in digital currency related companies has begun work on a dedicatged decentralized finance (DeFi) index and fund.
Grayscale, which is a subsidiary of Digital Currency Group, stated today that it has developed an institutional grade fund and index which is aimed at meeting increasing interest in DeFi assets from a broad base of existing and prospective investors.
The idea of the fund is to give investors a chance to invest in DeFi protocols through a single investment vehicle, and of particular interest is the width of exposure to Uniswap, which is a decentralized finance protocol that is used to exchange cryptocurrencies.
The focus on Uniswap as a DeFi vehicle in institutional fund management is interesting, largely because one of the main advancements that have come about as part of the recent introduction of Uniswap v3 is that liquidity providers can provide liquidity with up to 4000x capital efficiency relative to Uniswap v2, earning higher returns on their capital.
Given that this is an intrinsic part of the incredibly empowering and sophisticated DeFi world, it would require a decentralized approach unless a user has access to a L2 via a fiat on-ramp such as CoinMetro.
Grayscale has also stated that it is now attempting to turn its main bitcoin trust (GBTC) into a bitcoin ETF, likely to deal with its consistent negative premium and is on board with American investment bank BNY Mellon to achieve this.
That’s no mean feat, and given the multi-faceted usability of the Uniswap protocol in its latest form and the role CoinMetro will be able to play in giving customers a fully integrated method of participating even via a fiat money point of entry, the accessibility of DeFi funds and indexes on an institutional investment basis is now suddenly very straight forward.