Original - Odaily

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Editor｜Qin Xiaofeng

After successfully converting its Bitcoin Trust into a Bitcoin spot ETF, Grayscale isn’t stopping. On March 5, Grayscale announced the relaunch of the Crypto Dynamic Income Fund (GDIF), bringing the emerging fund model into traditional finance again and further integrating Web3 and Web2.

According to official documents, GDIF is Grayscale’s first actively managed fund. It uses the pledge income of a multi-token asset portfolio to provide investors with a single familiar tool to participate in multi-asset pledges and obtain income from the fund model. Grayscale will Distribute earnings (in U.S. dollars) to investors. “GDIF was created to provide investors with access to PoS rewards without the operational challenges of direct PoS investing. At the same time, investors have the opportunity to hold a portfolio composed of multiple crypto assets through a single investment.”

The Grayscale GDIF portfolio currently contains 9 crypto assets:Aptos (APT), Celestia (TIA), Coinbase Staked Ethereum (CBETH), Cosmos (ATOM), Near (NEAR), Osmosis (OSMO), Polkadot (DOT), Sei Network (SEI), and Solana (SOL). The figure below shows the current asset proportion of GDIF funds. Among them, OSMO accounts for 24%, SOL accounts for 20%, DOT accounts for 14%, and the remaining portion accounts for 43%.

Grayscale’s criteria for selecting the above-mentioned assets come from its use of qualitative and quantitative factors to evaluate the returns of the crypto-assets, which are specifically reflected in aspects such as staking rewards, market value and liquidity. However, judging from the composition of the above tokens, most of them are projects with outstanding performance in the last bull market cycle (Polkadot, Near, Cosmos, Solana, Osmosis), and a small number of star projects with outstanding performance in this cycle ( Celestia, Aptos, etc.).

As you can see from the chart below, the fund has launched in October 2023. Grayscale used internal funds to provide start-up capital for the fund in the early stage. The funds current maximum gross profit margin is approximately 160%, and after deducting corresponding expenses, the net profit margin is 140%.

However, the fund is not completely open to the outside world, and investors have certain investment thresholds. According to Grayscale’s official website, “Qualified Investment Customers” means that the investor’s asset management scale needs to be more than US$1.1 million, or the net assets must be more than US$2.2 million.

The Cosmos ecosystem may become the biggest winner

The above describes the asset composition of the GDIF fund. There are four types of Cosmos-related projects, including Celestia, Sei Network, Cosmos and Osmosis.

（1）Osmosis（OSMO）

Osmosis uses Cosmos IBC cross-chain technology for cross-chain asset transactions, providing LPs with higher APR returns through multiple pledge mechanisms. In addition, Osmosis provides cross-chain transactions between the Cosmos ecosystem and the Ethereum ecosystem, and has partnered with Axelar to expand to other ecosystems. Currently, according to DefiLlama data, Osmosis ranks tenth in TVL in the DEX sector of the entire network, with a total TVL of US$228 million.

Osmosis accounts for as much as 24% of the assets in Grayscale Fund, mainly because Osmosis has higher staking returns in DEX. Secondly, as the largest cross-chain DEX in the Cosmos ecosystem, its radiation range is relatively wide, which is conducive to operational choices.

（2）Sei Network（SEI）

Sei Network is DeFi L1 built on Cosmos, which is more like a middle ground between public chains and application chains. As the first L1 in the Cosmos ecosystem to support order books, Sei Network aims to become a high-speed chain dedicated to transactions to help decentralized exchanges run better.

（3）Cosmos（ATOM）

Cosmos is an early representative project of multi-chain interconnection, and its Cosmos SDK has become the preferred model for building many new public chains and applications. Although it experienced a fork turmoil last year due to the issue of staking income, it was generally not affected. The ecological scale of Cosmos is only smaller than that of the Ethereum ecosystem, and its token staking rights are sought after by many users.

（4）Celestia（TIA）

As a representative project of modular blockchain focusing on data availability, Celestia is built through Cosmos SDK. Most of the team members at Celestia come from Cosmos. Since its launch last year, the token TIA has increased more than 10 times.

According to the above introduction, it can be found that the Cosmos ecosystem is far better than other public chains in terms of underlying technology and ecological development (second only to Ethereum), and can provide more ways of staking income; in contrast, Ethereum, although there are many second-tier projects, There are fewer projects that can obtain native staking benefits. Because of this, Grayscale Dynamic Income Fund has a relatively high proportion of Cosmos-related assets.

Perhaps affected by the Grayscale GDIF, the tokens of Cosmos, Sei Network and Osmosis have generally increased by around 10% in the past 24H: ATOM is currently trading at 13.7 USDT, with a 24H increase of 10.34%; SEI is currently trading at 0.81 USDT, with a 24H increase of 11.8%; OSMO is currently trading at 0.81 USDT, with a 24H increase of 11.8%; It was quoted at 1.75 USDT, with a 24H increase of 9.72%.

summary

Grayscale launched a new fund GDIF, gradually shifting itself from passively receiving crypto fluctuations to actively participating in obtaining crypto native income. For Grayscale, this move is to further explore the source of income from crypto assets, and gradually introduce it to traditional finance, increasing the efficiency of fund management. Diversity.

For the crypto market, the nine crypto asset projects included may gradually move into the mainstream market due to Grayscale’s participation in staking. Compared with the trust launched earlier by Grayscale, the Bitcoin Trust was successfully launched in the form of a spot ETF, and the subsequent Ethereum Trust may follow in the footsteps of Bitcoin. Excluding BTC and ETH, the remaining crypto assets are still relatively unfamiliar to the huge traditional finance, and still need the promotion of mainstream asset management companies such as Grayscale to help the crypto market become mainstream as soon as possible.

Another question is whether Grayscale’s launch of funds to provide pledge services will trigger regulatory nerves?

In February 2023, Kraken was sued by the U.S. SEC for providing crypto staking services. It eventually paid a fine of US$30 million and suspended U.S. local staking services. Kraken eventually established independent subsidiaries overseas to provide staking services for non-U.S. customers. Coincidentally, in July last year, Coinbase was also sued by multiple states in the United States for violating the Securities Act of 1933 for providing staking services. Now that Grayscale has openly launched a staking service to challenge the SEC, regulatory pressure may come soon (after all, Grayscale and the SEC have deep disputes, and they will win or lose in court).

But on the bright side, Grayscale’s approach may make it impossible for supervision to start. After all, the pledge income services provided by Coinbase and Kraken as exchanges are fully managed pledge services, that is, users deposit relevant tokens into the cold wallet addresses of Coinbase and Kraken, and they perform the pledge services of the target chain on their behalf, and the relevant keys are mastered in their exchange hands.

What Grayscale provides is a fund. Investors purchase the fund in U.S. dollars, and finally pay the proceeds in U.S. dollars, which does not involve the transfer of cryptocurrency rights. Grayscale also seems to be deliberately avoiding supervision and looking for legal gray areas, but it is still unclear whether it will be able to do so in the end.