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Grayscale Investments Launches Trust With Exposure To Ethereum Competitor Solana

Grayscale Investments Launches Trust With Exposure To Ethereum Competitor Solana
Written by publisher team

Digital asset investment giant Grayscale is launching a new product that offers exposure to one of today’s hottest digital assets, Solana. Detected exclusively for Forbes Solana Trust will be the 16th offering in Grayscale’s expanded product line catering to high net worth institutions and investors.

It’s easy to see why Grayscale is offered to Solana. Although its performance has been muted this month as part of overall market volatility, the blockchain’s native SOL token remains one of the best performing assets for 2021, especially among major cryptocurrencies, with a 687% so far. These returns dwarf those of some of its major competitors, such as Ethereum, Algorand, Cardano, and Polkadot, all of which are vying to be the dominant home of decentralized finance applications, NFT trading and blockchain-based gaming. The only other major competitor offering a similar return is Avalanche, which grew 680% in 2020 but holds a small portion of Solana’s market capitalization ($62.32 billion versus $26.97 billion).

Solana is also the network of choice for 29-year-old billionaire Sam Bankman-Fried, founder of crypto exchange FTX and the richest person in the industry with a net worth of $26.5 billion. His frequent and public endorsement of the network has been invaluable in strengthening its public profile among developers and investors.

“In the minds of many investors, there is an ongoing desire to invest in Solana,” says Michael Sonnenchin, CEO of Grayscale. In a sense, it is a more cost-effective blockchain [than Ethereum]Today, we are seeing more than 500 DApps and about 1.2 million monthly active users on the network. When you kind of step back, and you see how fast she was able to go up, it’s definitely impressive.”

In fact, institutional money has been pouring into Solana for several months now at this point. According to new data from London-based asset manager Coinshares, nearly $250 million has been invested in SOL-based exchange-traded products (ETPs), of which $42.2 million has flowed in just this month. In a research report dated November 29, the company wrote, “In terms of inflows related to assets under management (AuM), Polkadot and Solana remain the winners, with inflows accounting for 8.6% ($11.5 million) and 5.9% ($14.6)m ) from AuM respectively last week.” Most of that money (over $190 million) is invested in a similar product from Switzerland-based 21shares, which launched on June 29, 2021.

However, regardless of performance and investor interest, Sonnenshein explained that one of the main reasons to offer this product now is Solana’s near and long-term potential, especially when it comes to identifying new use cases for blockchain technology. “The interesting thing about Solana is that it gives users the ability to learn, experiment and build. They generally have a bigger budget to experiment with the protocol than some other more established blockchains like Ethereum, due to lower transaction fees.” The average Solana transaction costs a fraction of a cent, while Ethereum users currently pay just over $40 per transaction, pricing in many users.

That potential is already starting to turn into momentum. According to Austin Federa, Head of Communications at Solana Labs, “As of late November, Solana has $14.45 billion in value reserved in applications on the network and more than 1,750 developers working on products. It is estimated that more than $2 billion in venture capital has been invested. in the ecosystem.”

Part of that huge amount includes $100 million dedicated to building Web 3.0 products on the network. The fund, led by Solana Ventures and Seven Seven Six, the venture capital firm led by Reddit co-founder Alexis Ohanian, was announced at Solana’s flagship Breakpoint conference in Lisbon this month.

Despite this progress, Solana had growing pains. For example, the network was shut down for about 17 hours in September due to transaction load management issues.

In addition, while the developers claim that the network can handle 65,000 transactions per second through a new way to coordinate the activities of its nodes, Solana is more centralized than some of its leading competitors, especially Ethereum. Although part of this is by design – to handle the throughput needed for certain applications, such as decentralized exchanges that match the performance of Nasdaq. The developers also claim that the cheaper the hardware becomes, the more nodes will be distributed.

However, for investors looking to learn about Solana via trust, it is important to read the finer details. For example, 21shares products are only available on some European stock exchanges. Additionally, Grayscale will require a minimum investment of $25,000, with a standard 2.5% management fee. On the other hand, New York-based Osprey Funds offers a similar product, which was launched last September, with a minimum of $10,000. It is waiving its 2.5% fee until at least January 2023.


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