Editor's Note: This article comes fromZhikuang University (ID: gh_37c9e0eaf00a), reprinted by Odaily with authorization.
Editor's Note: This article comes from
Zhikuang University (ID: gh_37c9e0eaf00a)
Zhikuang University (ID: gh_37c9e0eaf00a)
With the rise of liquidity mining on decentralized exchanges and the skyrocketing price of DeFi tokens, the Ethereum blockchain has doubled up again. According to data from etherscan.io, the Gas fee recommended by the Ethereum network has reached 330GWei (data on August 3), and the average transaction fee has exceeded $6, a record high.
At the same time, Grayscale Investments, the well-known “giant whale” with a well-known brand name, also launched a cryptocurrency promotional video on CNBC TV in the United States this week. The promotional video will also be broadcast on MSNBC, FOX, Television stations such as FOX Business broadcast it in turn.
In the 2020 Q2 report just released by Grayscale, statistics show that in the second quarter, a total of US$905.8 million of off-market funds flowed into Grayscale’s cryptocurrency trust products.
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Figure: As of the first half of this year, the total value of Grayscale’s cryptocurrency trust products has reached 2.58 billion US dollars
Why do so many funds pass through Grayscale instead of buying cryptocurrencies directly from the market? How does Grayscale keep these bitcoins? Will Grayscale take the lead in smashing the market in the future?
Today, Kuangkuai will introduce to you the giant whale of Grayscale Investment Company and its cryptocurrency trust products.
Grayscale Investment Company Profile
The prototype of Grayscale Investment Company is a bitcoin investment fund under SecondMarket, a private equity trading platform. In 2014, Barry Silbert, the founder of SecondMarket, separated the Bitcoin investment fund from the original company and established Grayscale Investments.
In 2015, Grayscale Investments was merged into the newly established Digital Currency Group (DCG). DCG not only focuses on digital currency and blockchain investment, but also an incubator for start-ups. In addition to Grayscale Investment Company, DCG also has two subsidiaries, Genesis, a cryptocurrency OTC broker, and CoinDesk, a blockchain news website, as well as more than 150 other blockchain companies/projects it has invested in.
After years of development, Grayscale Investments has become the world's largest cryptocurrency asset management company, and its cryptocurrency trust has reached $4 billion as of the time of publication.
What cryptocurrency trust products does Grayscale have?
It wasn't until September 2017 that Grayscale Investments' Bitcoin Trust began to see explosive growth. Now, it has become the world's largest bitcoin investment trust fund, with more than 408,500 bitcoins, nearly 2% of the total bitcoin.
In addition to the Bitcoin Trust Fund, Grayscale Investments also launched BCH, ETH, ETC, Horizen, LTC, XLM, XRP, ZEC trust funds, and a compound cryptocurrency trust fund (Grayscale Digital Large Cap Fund) that includes mainstream currencies. ).
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Picture: Trust products of Grayscale Investment Company
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What are the purchase forms of Grayscale's cryptocurrency trust products?
Grayscale’s cryptocurrency trust products can be purchased in two forms: capital investment and physical investment.
Capital contribution means that investors pay cash directly to Genesis Global Trading, an over-the-counter cryptocurrency trading broker under DCG. After Genesis receives the payment, it converts it into the specified cryptocurrency (such as BTC, ETH or others) according to the market price, and then Then deliver these cryptocurrencies to Grayscale Investment Company. After Grayscale Investment Company receives the cryptocurrencies, it will be entrusted to Coinbase Custody, and at the same time, it will issue equivalent GBTC, ETHE or other encrypted currency trust shares.
GBTC represents the BTC trust of Grayscale Investment Company, and one GBTC is 0.00095744BTC. So far, Grayscale has issued 427 million GBTC; ETHE represents the ETH trust of Grayscale Investment Company, and one ETHE is 0.09355650ETH , so far, Grayscale has issued 21.51 million copies.
In addition to capital contributions, Grayscale Investments also allows in-kind contributions.
Contribution in kind means that investors directly deliver cryptocurrencies (such as BTC, ETH or others) to Grayscale Investment Company in exchange for trust shares of GBTC, ETHE or other cryptocurrencies.
In addition, the following encrypted currency trust products of Grayscale Investment Company have been launched on secondary market trading platforms (such as OTCQX). Investors can purchase directly through these secondary markets (including premiums) as long as they have a US stock account:
Grayscale Bitcoin Cash Trust (Symbol: BCHG)
Grayscale Ethereum Trust (code: ETHE)
Grayscale Litecoin Trust (code: LTCN)
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With such a high premium, why would anyone still buy it?
The trust products of Grayscale Investment Company include a very high premium (compared to buying cryptocurrencies directly in the market). As an example, the premium rate of the Ethereum Trust (ETHE) is as high as 126%:
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Chart: Grayscale Ethereum Trust Premium
The premium of Grayscale Investment's Bitcoin Trust GBTC has also been maintained at around 18% for a long time.
Let’s take a look at the customer profile of Grayscale’s trust products: According to the just-released Q2 report, institutional investors account for more than 80%, followed by qualified investors, pension accounts, and family offices (specially for super-rich families). comprehensive wealth management institutions).
Figure: The customers of grayscale trust products are mainly institutional investors
Grayscale Investment Company will open private placements to qualified investors and institutional users in the primary market every quarter, allowing them to deposit funds into the trust in the form of cash or cryptocurrency (minimum amount of 50,000 US dollars).
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How does Grayscale Investment Company make profit?
Among them, BTC trust has the lowest fee rate of 2% per year; ETC trust and compound trusts including mainstream currencies have the highest rate of 3% per year; other cryptocurrency trust products have a management fee of 2.5% per year. It should be noted that the management fee charged by Grayscale Investment Company already includes Coinbase Custody's cryptocurrency custody fee (1.2% per year).
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Figure: The annual management fee of the trust products of Grayscale Investment Company
According to the current trust scale, the annual management fee charged by Grayscale Investment Company has exceeded 50 million US dollars, which is a very big piece of meat and potatoes.
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Will Grayscale Investment take the lead in smashing the market?
Grayscale Investment Company currently owns 408,500 BTCs and 1.98 million ETHs. While many retail investors are envious, they are also very worried about whether Grayscale will take the lead in smashing the market in the future.
At this stage, you can rest assured, because Grayscale’s trust products do not yet support the redemption of cryptocurrencies.
Can’t redeem cryptocurrency, wouldn’t it be a “stand-alone” game? So, how do investors exit?
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Because it does not support the redemption of cryptocurrencies, there is no need to worry about the investors of the trust products of Grayscale Investment Company taking the lead in smashing the market at this stage. Every time Grayscale sells a trust product, it is equivalent to locking up a corresponding cryptocurrency, which reduces liquidity and is a real benefit to the market.
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1、Grayscale Digital Asset Investment Report 2020-Q2
According to the Q2 report, after the Bitcoin block reward is halved, the number of Bitcoins flowing into Grayscale trust products has exceeded the number of newly mined Bitcoins. So, please cherish every bitcoin in your hand.
