The 21Shares Aave ETP (AAVE) offers a regulated and transparent investment vehicle that tracks the performance of Aave tokens. It is 100% physically backed, providing direct exposure to the Aave ecosystem, a leading decentralized finance (DeFi) lending protocol. This exchange-traded product simplifies access to one of the fastest-growing sectors within the DeFi landscape for traditional investors.
Product Overview
What Is the 21Shares Aave ETP?
The 21Shares Aave ETP is an exchange-traded product designed to mirror the performance of the native AAVE token. It is fully collateralized by physical Aave tokens held in secure, regulated custody. This structure allows investors to gain exposure to the price movements of Aave without the complexities of directly purchasing, storing, or managing digital assets on a blockchain.
This ETP provides a bridge between traditional finance and the innovative world of DeFi, making it accessible through conventional brokerage accounts.
Key Features and Structure
The product is structured to offer transparency and security. The underlying Aave tokens are held in cold storage by a qualified custodian, ensuring asset safety. Its listing on a major regulated exchange provides liquidity and ease of trading for investors.
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A notable feature is the sponsor's commitment to growth. 21Shares LLC (The Sponsor) has waived its entire management fee for the Fund until January 23, 2025, or until the fund's assets under management reach $500 million, whichever milestone is achieved first.
Key Information for Investors
For a clear understanding, here are the essential details about the 21Shares Aave ETP:
- Primary Exchange: The product is listed and traded on the Cboe BZX Exchange, Inc.
- Inception Date: The ETP began trading on January 31, 2022.
- Fund Custodian: Coinbase Custody Trust Company, LLC is responsible for the safekeeping of the underlying assets.
- Marketing Agent: Foreside Global Services LLC acts as the marketing agent.
- Securities Outstanding: As of the latest data, there are 415,000 securities outstanding.
Performance and Market Data
It is crucial for investors to understand that past performance is not a reliable indicator of future results. Market data for the ETP is typically provided by financial data providers. Performance metrics such as cumulative returns for periods like one month, three months, year-to-date (YTD), and since inception are tracked against the underlying AAVE asset's performance.
Investors should also monitor the bid/ask spread, which impacts the cost of trading the ETP. A narrower spread generally indicates better liquidity.
Understanding Premiums and Discounts
The ETP's market price may sometimes trade at a premium or a discount to its Net Asset Value (NAV). This chart shows the historical difference between the daily market price and the NAV, expressed as a percentage.
- The data shows the percentage of days the fund traded within a ±0.5% range of its NAV.
- This metric helps investors understand the historical efficiency of the market price in reflecting the true underlying value.
Analysis of premiums and discounts can provide insight into market sentiment and trading patterns surrounding the ETP.
The Role of Aave in DeFi
To appreciate this ETP, one must understand the value proposition of its underlying asset. Aave is a pioneering decentralized lending protocol. It allows users to lend and borrow a wide variety of cryptocurrencies without needing a traditional financial intermediary.
This system is powered by the AAVE token, which serves several functions, including governance (allowing holders to vote on protocol changes) and providing security to the network. The growth of the Aave protocol is a significant driver behind the value of the AAVE token.
Frequently Asked Questions
What does it mean that the ETP is "100% physically backed"?
This means that for every share of the ETP that exists, there is a corresponding amount of the actual AAVE token held in secure, regulated custody. This structure ensures that the product directly tracks the asset's price and provides a layer of security for investors.
How can I invest in the 21Shares Aave ETP?
You can purchase shares of the ETP through any standard brokerage account that offers access to the exchange it is listed on (Cboe BZX). The process is identical to buying shares of a company stock or any other exchange-traded fund (ETF).
What are the main risks associated with this investment?
Like any investment, it carries risk. The primary risks include the high volatility of the crypto asset class, the performance and adoption of the Aave protocol itself, regulatory changes affecting digital assets, and general market risks. It is essential to conduct thorough research and consider your risk tolerance.
How does the management fee waiver work?
The Sponsor has waived the entire management fee until either January 23, 2025, or until the fund's assets reach $500 million. This means investors will not pay a management fee during this period, reducing the total cost of ownership. Once either condition is met, standard fees will apply as disclosed in the fund's prospectus.
Is this product available to investors globally?
Availability depends on local regulations. While it is listed on a U.S. exchange, investors outside the U.S. should check with their financial advisor or brokerage to determine if they have access to this specific product and understand any applicable restrictions or tax implications.
What is the difference between holding the ETP and holding AAVE tokens directly?
Holding the ETP provides exposure to the token's price through a traditional security without the need to manage private keys or use a cryptocurrency exchange. However, ETP holders do not directly participate in on-chain activities like protocol governance voting, which may be available to direct token holders.