TL;DR
- Aave ETF Conversion: Grayscale filed to convert its Aave trust into a spot ETF holding AAVE directly, with Coinbase as custodian and a planned 2.5% fee.
- Competitive Filings: Bitwise submitted a separate Aave‑linked proposal, creating a competitive landscape as issuers expand beyond Bitcoin and Ethereum.
- DeFi Strength: Aave’s more than $27 billion in locked value and its staking‑driven token utility supported interest in regulated exposure as the Securities and Exchange Commission begins its review.
Grayscale moved to expand its altcoin ETF lineup by filing a Form S‑1 to convert its existing Aave trust into an exchange‑traded fund. The firm said the product would be renamed the Grayscale Aave Trust ETF and listed on NYSE Arca under the ticker GAVE. The application arrived as issuers sought to diversify beyond Bitcoin and Ethereum, positioning Aave at the center of the next phase of US altcoin ETF proposals.
Aave Conversion Filing Signals Broader ETF Expansion
The filing showed Grayscale intends to convert its trust into a spot Aave ETF holding tokens directly. Coinbase was named custodian and prime broker, while the manager disclosed a planned 2.5% fee. The move followed a wave of ETF structures targeting DeFi assets as institutions looked for exposure outside large‑cap tokens. Aave’s inclusion reflected growing confidence in lending protocols despite market weakness.
Bitwise submitted its own Aave‑linked application in December, proposing a structure with up to 60% direct token exposure and at least 40% in securities. Grayscale’s approach appeared simpler, relying solely on direct token holdings. The parallel filings highlighted competitive positioning among asset managers aiming to capture demand for regulated access to DeFi tokens. European precedents, including launches by 21Shares and Global X, demonstrated global appetite for Aave products.
Aave Fundamentals Support ETF Interest
DeFiLlama data showed Aave maintained more than $27 billion in total value locked across multiple blockchains, making it the largest decentralized lending protocol. CoinGecko reported AAVE trading at $126.71, still over 80% below its 2021 peak near $662. The token’s utility in staking and governance, along with supply‑reducing mechanics, strengthened arguments for a direct‑hold ETF structure. Developers continued expanding integrations despite prolonged valuation drawdowns.
Grayscale structured the product as a trust conversion, mirroring earlier crypto ETF transitions that streamlined regulatory review. NYSE Arca was selected as the listing venue, placing the fund alongside established digital asset products. The Securities and Exchange Commission will now evaluate custody, liquidity, and disclosure frameworks before determining approval. The agency’s initial review timeline will shape expectations for future decentralized finance ETF filings.
