On March 29, the firm announced its Grayscale Dynamic Income Fund (GDIF) stating that it is its first actively managed investment product.
Grayscale added that the new fund aims to optimize income in the form of staking rewards associated with proof-of-stake crypto assets.
It is the latest effort from the world’s largest crypto asset manager to retain clients and capital following a huge exodus from its flagship product (GBTC) and its conversion to a spot Bitcoin ETF.
Grayscale Dynamic Income Fund $GDIF is our first actively managed investment product. It seeks to optimize income in the form of staking rewards associated with proof-of-stake digital assets.
For important disclosures and more information: https://t.co/v5IR7nJQY1 pic.twitter.com/YTBJzJJbTQ
— Grayscale (@Grayscale) March 29, 2024
Grayscale Goes Into Staking
“Using qualitative and quantitative factors, we invest capital across a portfolio of proof-of-stake tokens,” it stated.
The fund will monetize token rewards into cash on a weekly basis, distribute the earnings to investors quarterly, and rebalance tokens to optimize income.
The disclosed holdings of the fund were very vague. It will be comprised of 24% of the decentralized Cosmos exchange Osmosis token, OSMO. An additional 20% will be held in Solana (SOL), and 14% will be in Polkadot (DOT).
The remaining 43% was mysteriously labeled as “other,” and there was no mention of the world’s largest proof-of-stake token, Ethereum. The Portfolio Manager for GDIF is Matt Maximo, who has been with Grayscale Investments since 2021.
Additionally, the new fund is only available to high-net-worth individuals with assets under management of more than $1.1 million or a net worth of more than $2.2 million, and it has a 10% performance fee.
Grayscale’s industry-leading Grayscale Bitcoin Trust (GBTC) has been hemorrhaging capital since it converted to a spot ETF in January. The fund, which once held a whopping 620,000 BTC, has shrunk by 46%, having lost 284,846 BTC worth $20 billion over the past eleven weeks.
This week alone, GBTC has shed $967 million worth of BTC. However, competing products from BlackRock and Fidelity have scooped up more, reversing a trend of outflows for Bitcoin ETFs.
GBTC, the largest Bitcoin fund, converted to an ETF, but decided to charge 6x-8x the fees of other Bitcoin ETFs. @Grayscale ‘s $GBTC vs @BlackRock ‘s $IBIT pic.twitter.com/AxvalWPl2e
— HODL15Capital 🇺🇸 (@HODL15Capital) March 30, 2024
Staking Outlook
The global staking market capitalization is around $355 billion, according to Staking Rewards.
It lists ETH as the leading staking asset, with $110 billion worth staked. Solana is the second-largest with $72 billion staked, followed by SUI, Aptos, and Cardano, which have around $15 billion worth staked each.
The average reward rate is 6%, it reported, though many of the higher-cap coins, such as ETH, SUI, ADA, and BNB, are lower than that.
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