Grayscale, one of the most recognized investment companies in the digital currency world, has broadened its “Grayscale Smart Contract Fund” to now encompass a varied ensemble of well-known cryptocurrencies.
This move reflects not only a deepening interest in smart contract platforms but also—ahem—a growing respect for their long-term potential.
Grayscale’s freshly tweaked fund saw big new positions in some very familiar names (Solana, Ethereum, Cardano) but also some fresh ink in the noteworthy projects Sui and Near Protocol.
Grayscale has made a fresh move in the cryptocurrency space, even as the digital asset market seems to lack any clear direction. The latest comes at a time when the market in totality is trying to find a bit of direction with investor sentiment going back and forth between cautious optimism and volatility. The actual investment, for some of these smart contract platforms, could be seen as Grayscale giving a bit of a nod to them.
Grayscale Smart Contract Fund: A New Look
The portfolio of Grayscale’s restructuring reflects a mix of both well-known and nascent blockchain technologies. The Smart Contract Fund, aimed at targeting those projects that undergird decentralized applications (dApps) and perform smart contract functions, now invests across several blockchain networks, each with its own distinctive value proposition.
1. Solana ($SOL) – 31.30%
One of the most discussed smart contract platforms, Solana takes the largest chunk of the fund at 31.30%. With a reputation for speedy transactions and great scalability, it has pulled in big developer and investor attention. Much of that has to do with a growing ecosystem that seems to promise everything from DeFi (decentralized finance) to non-fungible tokens (NFTs) to other flavors of decentralized apps. And though a few network outages earlier this year (2022) raised some eyebrows, Solana’s reputation for innovation and potential for massive scalability are probably the largest reasons why Grayscale has placed such a big bet on it.
2. Ethereum ($ETH) – 31.22%
Ethereum, the largest smart contract platform by market capitalization and the foundation for decentralized applications (dApps), has 31.22% allocated in the portfolio. The platform’s native coin, Ether, is the second-largest cryptocurrency by market cap, with over $200 billion in value, and it is one of the most widely held digital assets in Grayscale’s funds.
Grayscale’s stake in Ethereum is substantial and growing. Grayscale has about $14.9 billion in Ethereum in its portfolio, and the amount allocated to Ethereum by Grayscale is about 31.22%.
3. Cardano ($ADA) – 18.23%
Cardano, with its strong academic foundations and focus on sustainability, comes next in the portfolio, receiving an allocation of 18.23%. Led by Charles Hoskinson, one of Ethereum’s co-founders, Cardano has built a reputation for its methodical approach to blockchain development. With the successful launch of smart contracts on the platform and ongoing upgrades, Cardano has continued to build a solid developer ecosystem. Its focus on peer-reviewed research; its unique approach to scalability, security, and sustainability; have made it a key player in the smart contract space.
4. Avalanche ($AVAX) – 7.26% Avalanche, another blockchain famous for its high throughput and low latency, is assigned 7.26%. The network’s consensus mechanism, Avalanche’s novel architecture, and its capacity to process thousands of transactions per second make it a compelling alternative to Ethereum. Avalanche has been making waves among developers because of its promise to offer faster finality and lower costs. Grayscale’s interest in AVAX indicates that they see potential for Avalanche and its numerous applications to keep chugging along in the DeFi space and beyond.
5. Sui ($SUI) – 6.50%
The relatively new Sui blockchain, which boasts high scalability and transaction throughput, has also made its way into the fund with a 6.50% allocation. Built with the goal of providing a more efficient and scalable platform for decentralized applications, Sui leverages a unique consensus mechanism that focuses on minimizing latency. Although still in its early stages, Sui’s innovative approach to scalability and its strong development team have caught the attention of both investors and developers.
6. Near Protocol ($NEAR) – 2.95%
Near Protocol, with its concentration on usability and developer-friendly tools, possesses a merit-worthy share of the fund at 2.95%. The project’s message of simplifying the blockchain experience for developers and users hits home in the rapidly evolving ecosystem. Near, with its sights set on scalability and low-cost transactions, seems well positioned as a strong, dark-horse candidate for DeFi and enterprise blockchain applications.
7. Polkadot ($DOT) – 2.54%
Positioned at the bottom of the fund’s portfolio with a 2.54% stake is Polkadot, designed to enable different blockchains to work together. Its unique architecture lets different blockchains communicate and share data, making it a powerful tool for building decentralized applications that run across multiple networks. This focus on enabling communication between various blockchain ecosystems fits well with Grayscale’s overall diversification strategy.
Future ETFs and Upcoming Altcoins of Interest
Alongside the well-known cryptocurrencies in its portfolio, Grayscale has indicated that it is watching a number of alternative coins that could be set to explode in the next few months. Whether these projects will be added to Grayscale’s portfolio remains to be seen. At the very least, they are expected to be included in potential future ETFs.
1. Solana ($SOL)
2. Litecoin ($LTC)
3. Cardano ($ADA)
4. Polkadot ($DOT)
5. Hedera ($HBAR)
6. Aptos ($APT)
7. Dogecoin ($DOGE)
This collection of assets is a varied assortment of well-established coins and newer, more innovative kinds of projects that might figure more prominently in the future of decentralized applications and blockchain technology. Because more and more institutions are starting to pay attention to this marketplace, it seems quite possible that some of these underappreciated altcoins could be lying in wait to figure more prominently in our lives and in the marketplace in the coming years.
Grayscale’s Expanding Influence
Grayscale’s newest portfolio expansion indicates a rising attention to the smart contract ecosystem. Similar to the company’s other holdings, there is a mix of top-tier platforms and emerging projects in the Smart Contract Portfolio, including Ethereum, Solana, and (surprise!) NEAR. But let’s not kid ourselves: Grayscale is not the kind of company that operates in a vacuum. To the extent it is now including such projects in its portfolio, it is also sowing (if only through the illusion of legitimacy) the kinds of seeds that encourage all those billionaires, family offices, and endowments to invest in smart contract technologies.
Currently, Grayscale’s Smart Contract Fund offers a compelling roadmap for gaining exposure to a variety of smart contract platforms. Despite the ongoing market evolution, the tokens that comprise the fund appear to be a solid foundation for long-term investment strategies. That’s especially true as decentralized finance (DeFi), NFTs, and other blockchain-based applications continue to upset traditional business models.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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