Grayscale Investments is moving ahead with its plans to turn its existing Aave-linked closed-end trust into an exchange-traded fund (ETF), filing a Form S-1 with the U.S. Securities and Exchange Commission on Friday.
If approved, the fund would trade on the NYSE Arca, giving traditional investors easier access to the AAVE, the native token of the Aave protocol, through a regulated vehicle.
Aave is a decentralized lending platform on the Ethereum blockchain that offers automated cryptocurrency loans secured by other tokens you own as collateral. It also allows users to lend their crypto to earn interest.
Grayscale launched its Aave Trust in October 2024 as part of a broader expansion into altcoin-focused investment products. The fund currently manages just under $896,230 million in assets, with a net asset value per share of 11.52%.
Aave has become a widely used asset in investment products, featured in DeFi-focused index funds and standalone offerings such as the 21Shares Aave ETP and Global X Aave ETP, both traded in Europe.
The planned Grayscale AAVE ETF would charge a 2.5% sponsor fee on NAV, payable in AAVE. Coinbase would provide the prime brokerage services, including AAVE custody and trade execution.
The AAVE token hasn’t escaped prevailing market headwinds. The asset trades at $129.62, down 25.6% over the past 30 days and 80.5% off its all-time high of $661.69 in May 2021, CoinGecko data shows.
Grayscale isn’t alone in its push for an AAVE ETF. In December, Bitwise filed with the SEC to introduce 11 crypto strategy ETFs, covering tokens including AAVE.
If the S-1 clears regulatory hurdles, the AAVE ETF would become one of the first U.S.-listed products tracking a smart contract blockchain outside the crypto majors. That could signal a shift in how traditional finance allocates to digital assets, with token-specific infrastructure plays becoming part of diversified crypto investment strategies.
