Grayscale Investments has launched the Grayscale Dynamic Income Fund (GDIC), a unique investment vehicle designed to provide sophisticated investors with access to the income generated by staking cryptocurrency tokens. The fund targets those individuals who have over $1.1 million in assets under management (AUM) or a net worth of more than $2.2 million, demonstrating its orientation toward the wealthier class.
GDIC intends to convert staking rewards into US dollars once a week to distribute earnings to investors quarterly. Grayscale has focused on the thoroughness of its process for choosing Proof of Stake (PoS) tokens for inclusion in the fund’s portfolio, recognizing the diverse staking and unstaking timelines and requirements for each token. Nevertheless, the fund tends to maximize the staking income, but capital growth is the underlying objective.
Portfolio composition and regulatory issues
Grayscale has disclosed that its fund’s portfolio will initially comprise three PoS tokens: OSMO, SOL, and DOT, with 24%, 20%, and 14% allocations, in that order. The remaining 43% of the portfolio will be comprised of different tokens. This strategic choice was made considering the actual staking reward rates, where OSMO is at 11.09%, SOL is at 7.42%, and DOT is at 11.9%, according to Staking Rewards.
Coincidingly, Grayscale issued a spot Bitcoin exchange-traded fund (ETF) on Jan 11 and is facing criticism over its high fees, which have caused an outflow of over $14 billion. The fund management fee of 1.5% per annum is substantially higher than the average fee of 0.30% charged by other spot Bitcoin ETFs. Furthermore, Grayscale continues to struggle with regulatory issues in obtaining the US Securities and Exchange Commission (SEC) approval for its Ethereum Futures ETF.
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