Grayscale adds Solana, Uniswap to Digital Large Cap Fund

Grayscale Investments has added Solana and Uniswap to its Digital Large Cap Fund as the market capitalizations of both tokens have grown in recent months.

The Grayscale Digital Large Cap Fund (GDLC) launched in February 2018 and has $495 million assets under management. The investment vehicle offers exposure to the upper 70% of the digital currency market in the form of a security without the challenges of holding digital currencies directly.

Solana ($SOL) and Uniswap ($UNI) join bitcoin ($BTC), Ethereum ($ETH), bitcoin cash ($BCH), Litecoin ($LTC), Cardano ($ADA) and Chainlink ($LINK) in the fund. BTC and ETH accounted for more than 90% of the fund holdings combined, as of Aug. 31, while the allocation to $ADA was 6%. The weightings for $BCH, $LINK and $LTC stood at just below 1% each.

“We will sell the existing fund components in proportion to their weightings and then [put in] Solana and Uniswap,” Craig Salm, Grayscale’s head of legal, told Blockworks Friday morning. “The fund is really a great way for our investors who don’t want to make a targeted bet on bitcoin, Ethereum or another digital asset; they just really want broad market exposure.”

Solana and Uniswap made up about 3% and 1% of the fund’s holdings, respectively, as of Friday evening after the fund rebalancing.

Solana, which touts itself as the world’s fastest blockchain, along with decentralized crypto trading protocol Uniswap, became eligible for inclusion in GDLC based on their market cap growth in recent months. Salm noted that Grayscale also considered the tokens’ liquidity and the firm’s ability to create a price for it, among other factors. 

$SOL’s market cap was at more than $48 billion, as of 4:30 pm ET Friday, according to CoinGecko, which was the sixth-highest among coins. Its price was $160.74 at that time, which was up about 7% week over week.

The $UNI token carried a market cap of about $13 billion, which is 13th-highest. $UNI’s price was $25.28 at 4 pm, CoinGecko data shows, up more than 17% in the last seven days.

While Uniswap is the top holding in the Grayscale DeFi Fund, Solana is new to the Grayscale product family.

Matthew Sigel, head of digital assets research at fund manager VanEck, previously told Blockworks that Solana was one of several layer-1 smart contract protocols with the track record, size and community engagement to perhaps someday rival Ethereum.

Tushar Jain, a managing partner at Multicoin Capital, argued during Blockworks’ Digital Asset Summit last month that layer-1 blockchains are currently more reliable than the layer-2 solutions built on top of them, adding that Solana is one of his firm’s “big bets in this space.”

Future Grayscale products?

Though Solana does not quite fit the theme of its DeFi fund, Salm said, the world’s largest digital currency asset manager could look to include $SOL in future offerings. A theoretical Grayscale fund focused on layer-1 smart contract platforms, for example, would likely include Ethereum, Solana, Avalanche and Polkadot, he explained.

“It’s really exciting now to be in the cryptocurrency space because investors in the market are starting to consolidate around different types of themes,” Salm said. “…Things like layer-1, gaming, metaverse, privacy – these are all things that we’re floating around to see where there’s investor demand.”

Grayscale recently hired David LaValle, who was the CEO of Alerian, to be its global head of ETFs. The firm is looking to convert its flagship closed-end fund, the $27.8 billion Grayscale Bitcoin Trust (GBTC), to an ETF.

Salm said that LaValle is also focused on helping the asset manager launch funds that invest in the stocks of public crypto companies, such as Coinbase.  

“It’s all about us diversifying exposure for our investors so they can express their view on crypto or more targeted types of thematic investments,” he said.