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An article explaining the operation mode of Grayscale Trust in detail.



Since its establishment in 2013, Grayscale currently provides qualified investors with exposure to 9 encrypted assets such as BTC and ETH through 9 single-asset trusts and 1 digital large-cap fund. , ETH 2.7 million, has become a force that cannot be ignored in the encrypted asset market. The founder of Grayscale, Barry Silbert, has personally invested in Bitcoin since 2012. In 2013, he invested in Coinbase, Bitpay, Ripple and other current encryption giants. In the same year, he directly promoted the establishment of SecondMarket, a private equity trading platform he founded in 2004. Today, Grayscale, a bitcoin trust company, and Genesis Trading, a bitcoin over-the-counter trading platform, are the rudimentary departments. In 2015, SecondMarket was acquired by Nasdaq, but retained its encrypted asset-related business. In 2015, Barry Silbert integrated these two businesses with his personal investment business and established DCG (Digital Currency Group). Currently, DCG has five subsidiaries and directly invests in more than 160 cryptocurrency and blockchain-related companies. Source: dcg official website Grayscale Investment was established in 2013. So far, it has been roughly divided into three stages: 2013-2016, the exploration period, Bitcoin Trust is its only product, and the non-redeemable clause was determined in 2014. In 2015, GBTC was listed on the OTC market, opening up the primary and secondary markets. During this period, the asset scale was small, with only an increase of 700 million US dollars; from 2017 to 2019, during the period of product diversification, 9 new varieties were added, and the assets The scale has increased by US$ 2.6 billion; 2020 is a period of rapid growth. On the one hand, compliance has been improved. Bitcoin Trust and Ethereum Trust have become companies reporting to the SEC, and the lock-up period for primary market subscription shares has been reduced from 12 months By 6 months, on the other hand, both capital inflow and asset size have doubled. Data: 45 million XRP transferred to the Bitstamp platform, worth $23 million: Jinse Finance reported that according to Whale Alert data, a total of 45 million XRP (approximately $23 million) was transferred from unknown addresses to the Bitstamp exchange in the past 24 hours , which is one of Ripple's ODL (on-demand liquidity) partners; since then, 25.33 million XRP have been transferred from the Bitstamp exchange to a new unknown address. [2022/10/9 12:50:26] Source: grayscale From the perspective of capital inflow, since its establishment in 2013, as of the third quarter of this year, the accumulated capital inflow has reached 3.63 billion US dollars, of which the first three quarters of this year accounted for 68%, ETH trust, BCH trust, LTC trust and large-cap funds have increased significantly this year. According to the information disclosed by Grayscale to the SEC, in October and November, the inflow of Bitcoin trust alone was 1.223 billion US dollars (corresponding to approximately 81,000 BTC). According to estimates, by the end of this year, the cumulative capital inflow is expected to reach 5 billion US dollars. Data source: Grayscale currently provides 9 single-asset investment products, providing exposure to BTC, BCH, ETH, ETC, ZEN, LTC, XLM, XRP, ZEC, and 1 diversified asset product, which is invested in The asset with the highest market value in circulation currently holds BTC, ETH, XRP, LTC, and BCH, weighted by the market value of each asset, and re-weighted on the first working day of January, April, July, and October every year. Among them, Bitcoin Trust (GBTC), Bitcoin Cash Trust (BCHG), Ethereum Trust (ETHE), Ethereum Classic Trust (ETCG), Litecoin Trust (LTCN) and Digital Large Market Cap Fund (GDLC) have been listed on the OTC market. Grayscale Bitcoin Trust became an SEC reporting company on January 21, 2020, and Grayscale Ethereum Trust became an SEC reporting company on October 12, 2020. The closure period was shortened from 12 months to 6 months. Nomura Holdings Launches an Encryption Venture Capital Unit Laser Venture Capital: Jinse Finance reported that Nomura Holdings will launch an encryption venture capital arm as part of its new digital asset business. The unit, called Laser Venture Capital, will invest in companies in the digital ecosystem with a focus on decentralized finance (DeFi), centralized finance (CeFi), web3 and blockchain infrastructure. Steven Ashley and Jez Mohideen will serve as chairman and chief executive officer, respectively, of Nomura's laser digital encryption business. As part of her new role, Ashley has resigned from her previous position as head of the bank's wholesale division. [2022/9/21 7:11:24] As of November 30, the total management scale of Grayscale has reached US$12.2 billion, of which the trust scale of Bitcoin is about US$10.2 billion, accounting for 83%, and the trust scale of Ethereum is about US$10.2 billion. 1.6 billion US dollars, accounting for 13%, the size of digital large-cap funds is 170 million US dollars, and the rest are smaller. Data source: Grayscale, 2020/11/30 1. Subscription mode Grayscale’s Bitcoin Trust accepts two forms of capital contribution, namely cash contribution and physical contribution (BTC). In the cash contribution mode, investors submit subscription funds to Grayscale, and Grayscale hands over the subscription funds to authorized brokers, and Genesis buys BTC in the spot market, and then deposits them in the custodian institution Coinbase for cold storage. Investors issue equivalent Bitcoin trust shares GBTC. In the mode of BTC physical investment, investors hand over BTC to Grayscale, and Grayscale deposits BTC in Coinbase for custody, and at the same time issues equivalent Bitcoin trust shares GBTC to investors. The part of the cash contribution will flow into the spot market at the time of subscription, and the part of the physical contribution may bring the funds back to the spot market after the 6-month lock-up period ends. According to the third quarterly report of 2019, in-kind investment accounted for 79%, and cash investment accounted for 21%. (This data will not be released after this.) 2. During the opening period, Grayscale will regularly open private placements to qualified investors and institutional users in the primary market. On each trading day of the opening period, deposits in the form of cash or BTC are allowed to trust. The opening period is determined by Grayscale itself. For example, on July 1 this year, Grayscale suspended the subscription of Bitcoin Trust and resumed at the end of July. NFL superstar Tom Brady claims to be a super fan of V God and looks forward to meeting him: On March 20th, the now retired NFL legendary quarterback Tom Brady expressed on Twitter that he would like to meet Ethereum co-founder Vitalik Buterin (V God) meet. Brady admitted that he is a "super fan" of V God and thanked V God for his contribution to the cryptocurrency industry. He pointed out that without Vitalik, he would not have been able to create his own NFT startup Autograph. Earlier news, Autograph, a sports and entertainment NFT platform created by Tom Brady, announced the completion of a $170 million Series B round of financing. [2022/3/20 14:07:29] 3. Redemption mechanism Since October 28, 2014, Grayscale Bitcoin Trust has suspended its redemption mechanism, and currently does not allow redemption of shares. In the future, a redemption mechanism may be set up at the discretion of the trust sponsor and after obtaining regulatory approval from the SEC, but Grayscale currently has no intention of submitting a redemption plan to the SEC. 4. Asset Custody Grayscale Bitcoin Trust's Bitcoin assets are stored in offline or "cold" storage, with Coinbase Custody acting as the custodian. 5. Management fee The management fee of the Bitcoin trust sponsor is accumulated daily in the form of US dollars. The accounting time is 4:00 pm New York time every day. The accounting basis is the amount of bitcoin held in the trust, and the annualized fee rate is 2%. If the accounting day is a non-working day, the accounting basis is the bitcoin holdings on the most recent working day minus accrued but unpaid interest. The USD amount of the daily accrual will be converted to Bitcoin by reference to the same Bitcoin Index price that determines the accrual. Fees are paid monthly to promoters in Bitcoin. 6. Closed period In January 2020, Bitcoin Trust officially became a company reporting to the SEC. The closed period was shortened from 12 months to 6 months, and the shares subscribed in the primary market can be freely transferred after 6 months. Grayscale currently holds 9 digital assets including BTC and ETH through single-asset trust products and large-cap funds. Among them, the BTC holdings are about 540,000, accounting for 2.93% of the total BTC circulation, and the ETH holdings are about 2.7 million, accounting for ETH accounts for 2.38% of the total circulation, and ETC positions account for 10.54% of the total circulation. Sources: DCG is hiring a team of financial advisors for its wealth management business targeting crypto millionaires: Golden Finance reports that Grayscale parent company Digital Currency Group (DCG) is seeking to provide financial services for wealth management companies, according to sources with knowledge of the company’s operations. Business hires team of financial advisors. As first reported last December, DCG has spent the past year planning to launch a new wealth management business with an eye toward launching it next year. The new unit will focus on wealthy cryptocurrency millionaires for a wide range of wealth advisory needs, the sources said. [2021/11/2 21:16:45] Note: Total holdings = single asset trust holdings + market fund holdings Data source: Grayscale, CoinGecko, 2020/11/30 It should be noted that Grayscale is not directly Instead of announcing the number of holding coins, it will regularly update the total amount of trust shares and how many corresponding digital assets each share corresponds to. The grayscale positions disclosed in the current market are all calculated by the formula "positions = number of issued shares * unit positions". The 6 varieties currently listed on the OTC market will update the "number of issued shares" and "unit share holdings" on the product introduction page of the official website every trading day, so the position changes can be calculated day by day, while ZEN, XRP, XLM, ZEC For these 4 varieties, Grayscale updates the total size and unit value on the official Twitter every day, but the update frequency of issuance shares and unit positions is about one month, so there is a certain delay in the changes in positions tracked by the above formula. Since 2020, Grayscale Bitcoin Trust (excluding large-cap funds) has added about 250,000 new positions, and the new circulation of Bitcoin during the year is about 420,000. Calculated after halving, Grayscale’s new positions and new Mined bitcoins were roughly flat. Data source: the block, grayscale, 2020/11/30 The growth rate of Ethereum Trust has surpassed that of Bitcoin Trust. ETH holdings have increased by 2.1 million this year, a five-fold increase from the beginning of the year. Charitable cryptocurrency project Pawthereum uses blockchain technology to help animal shelters raise donations: October 10th, the community-run charitable cryptocurrency project Pawthereum has been fully launched on the Ethereum blockchain. Prior to this, an all-volunteer team Groundwork has been underway for months to rescue, revitalize and reshape the abandoned Grumpy Finance project. Supporting animal shelters and advocating for the welfare of animals in need is at the center of the project. Its PAWTH token has built-in charitable donation functionality. A percentage of every transaction is automatically sent directly to the charity's crypto wallet, while donations to specific animal shelters will be voted on by Pawthereum token owners. To date, over $72,000 has been raised and given in donations prior to the project's launch. (Globe Newswire) [2021/10/10 20:18:44] In addition, the holdings of BCH and LTC have increased significantly this year. In the second half of the year, Grayscale increased its holdings of BCH by about 150,000, mainly in August; Increased holdings of about 800,000 LTC, mainly in August, September, and November. In addition, it should be noted that Grayscale does not have the problem of reducing holdings, but the currency corresponding to each share will be reduced due to the daily accrual of management fees. If there are no new issuance shares, the actual holdings will decrease. Taking ETC as an example, when there is no new issuance from September to October, the annualized 3% management fee is accrued daily, resulting in a decline in open interest. Data source: QKL123, 2020/11/30 1. Secondary market trading volume GBTC was listed on OTCQX, the highest-level over-the-counter trading market in the United States, in March 2015. From 2017 to 2019, it was rated as the OTCQX Best Market Performer for three consecutive years. One of the good 50 bids. At present, the daily trading volume is about 300 million US dollars, which is the most active-zce target in the OTC market. The daily transaction volume of ETHE (Ethereum Trust) is also tens of millions of dollars, ranking among the top ten. The secondary market activity of the rest of the products is poor. Data source: otcmarkets, 2020/11/30 2. Secondary market premium The GBTC secondary market price is basically consistent with the BTC price trend, and the secondary market volatility is higher, but there is a persistent positive premium, which exceeds 100% at the highest point, nearly one It has remained at around 20% over the years. The U.S. stock OTC market and the Bitcoin spot market are two isolated markets. Non-redeemable, 6-month lock-up period, and limited circulation all set certain thresholds for arbitrage, and also make trust shares have a long-term positive effect in the secondary market. premium. And the lower the circulation rate, the higher the premium. For example, the secondary market premium of Litecoin Trust (LTCN) was as high as 57 times, but the actual circulation is less than 100,000 copies, and the circulation rate is only 1%. The premium of Bitcoin Trust tends to narrow with the activity of the secondary market, and is currently about 20%. Data source: grayscale, 2020/11/30 For currency-based investors, GBTC can achieve currency-based income enhancement. Subscribe for GBTC shares from Grayscale in the form of BTC in-kind investment. After the 6-month lock-up period ends, you can choose an opportunity to sell GBTC in the secondary market. The income is the secondary market premium minus an annualized 2% management fee. In addition, on the one hand, leverage can be enlarged by borrowing currency, and on the other hand, income can be locked in advance by selling securities, but it is necessary to consider that comprehensive income can cover additional borrowing costs. For US dollar-based investors who hold GBTC shares, if the price of the currency drops sharply, the price of GBTC will also show the same downward trend. The premium in the secondary market may not necessarily bring deterministic benefits, so Grayscale is important for this The biggest advantage of class investors is that they can conveniently track Bitcoin exposure through compliant channels.


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An article explaining the operation mode of Grayscale Trust in detail.

Since its establishment in 2013, Grayscale currently provides qualified investors with exposure to 9 encrypted assets such as BTC and ETH through 9 single-asset trusts and 1 digital large-cap fund. , ETH 2.7 million.

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