Grayscale, New Grayscale Luna and Decentralized Grayscale Blackhole DAO: A Revolution Battle for the DeFi World

The Matthew effect is increasingly dominant in the traditional financial world as revealed by Credit Suisse’s Global Wealth Report 2021.


The gap between the rich and the poor continues to rise sharply around the globe and the richest 10% command 82% of the world’s wealth, with the richest 1% even grasping nearly half of the number (45%).


Wealth and vertical social mobility have become even more faraway dreams for all grassroots. Be it top investment organizations in the traditional financial sector such as Sequoia Capital, Blackstone, BlackRock and Buffett’s Berkshire Hathaway, or those in the blockchain field like a16z and Grayscale, the world’s best and most profitable figures and institutions are universally serving other affluent figures and institutions of the world. The vast majority of ordinary investors across the world are playing a zero-sum game against the cleverest investors of first-class organizations represented by Wall Street.


In such an unfair game, ordinary investors are doomed to failure.

Is it possible for ordinary investors to find a better approach to investment and commence a nugget journey in the decentralized DeFi world?

“A day in the Bitcoin world, three years in the real world” is a popular saying in the blockchain industry, which suffices to demonstrate that the blockchain industry is a fast-developing emerging industry. New products and projects never cease coming into view with a variety of directions and products being available to be invested in, dazzling and overwhelming their investors. It necessitates quite professional knowledge and considerable time for learning and doing research. Hence, diverse asset management products are also arising for ordinary investors’ sake.


This article focuses on three representative innovative asset management products in the field of digital asset management for reference by blockchain enthusiasts.


Grayscale, New Grayscale Luna and Decentralized Grayscale Blackhole DAO: A Revolution Battle for the DeFi World

Grayscale, New Grayscale Luna and Decentralized Grayscale Blackhole DAO: A Revolution Battle for the DeFi World

I. Grayscale – Giant Bitcoin Stabilization Fund in Blockchain Industry

What Is a Stabilization Fund?

Simply put, a stabilization fund means a lot of money. If there is a problem with the exchange rate of a currency, the fund will serve to stabilize it in case the exchange rate system collapses.


The Role of Grayscale for Bitcoin

Same as the importance of a stabilization fund for US dollars, Grayscale stabilizes the price of bitcoins and the liquidity of assets. Grayscale, a subsidiary of the Digital Currency Group (DCG) established in 2013, is a trust fund dedicated to managing crypto assets.


Grayscale is an investment fund that takes the price of held bitcoins as the market value base. It provides a legal channel for investors to purchase/sell cryptocurrencies by setting up a special trust fund. In addition, it is also the largest asset management fund designed for cryptocurrency investment in the world. Grayscale operates in a manner similar to that of gold ETFs.


Irredeemable Shares of Grayscale

Distinct from other funds, shares of Grayscale cannot be redeemed. After Grayscale purchases the corresponding currency, the fund shares put into the market are locked up after being sold. Moreover, there is no channel for qualified investors and institutional users to redeem the bitcoins they have invested. They can only cash them out by selling equal fund shares in the secondary market. Thereby, the number of bitcoins held by Grayscale has been increasing ever since its advent. Same as traditional trust funds, Grayscale relies on management fees. As long as investors’ demand for investment in Grayscale proceeds to rise, revenue from management will be sustained for Grayscale.


The Main Approach for Institutional Investors to the Market

Grayscale’s Q4 report of 2020 shows that most of its investors (93%) are from institutions and are led by asset managers. Grayscale has reached USD 20.2 billion by the end of 2020. In addition, Grayscale Bitcoin Trust became one of the world’s fastest-growing investment products in 2020, with its asset management scale rising from USD 1.8 billion to USD 17.5 billion.

Therefore, it is now the major channel for institutional investors to enter the bitcoin market, whereas ordinary investors are struggling to get the money or opportunity to engage.

II. “New Grayscale” – Luna Foundation

Grayscale, New Grayscale Luna and Decentralized Grayscale Blackhole DAO: A Revolution Battle for the DeFi World

“…besides Satoshi Nakamoto, we will be the largest single holder of Bitcoin in the world.” said Do Kwon in an interview, the founder of Terra, which is one of the most representative algorithmic stablecoin projects for DeFi 2.0. In the address marked as Luna Foundation Guard, the position was opened on January 27, 2022, and by March 30, the number of bitcoins had reached 30,727.98.


It is reminiscent of Grayscale in 2020. Institutions have been holding bitcoins through Grayscale ever since. Hitherto, Grayscale possesses 640,000 bitcoins.


Simple Logic, Pot Endorsement

The logic that Terra applies when buying bitcoins is rather simple – they need them for endorsement. As an absolute financial ecosystem, Terra has its own native stablecoin – UST, which is an algorithmic stablecoin. What is behind anchoring at USD 1 is another native Token of their ecosystem, LUNA.


However, with the Terra ecosystem developing into the world’s second super network according to the TVL rankings, a mere LUNA endorsement can be risky considering that UST is one of the most important assets of the ecosystem. There are already many articles or opinions regarding the possibility of the death spiral of the Terra ecology. Thus, Do Kwon figured out a way to endorse with bitcoins. Do Kwon also said that the UST will be endorsed by not only bitcoins but also other assets. Once the idea has become reality, the “grayscale” of Luna will be more complete.


Differences between Grayscale and “New Grayscale” Luna Foundation:


Different objectives: Grayscale holds mainstream currencies such as bitcoins as the trust fund to support the value of trust fund shares. Luna Foundation holds popular currencies including bitcoins for the purpose of providing the value support and endorsement for its algorithmic stablecoin UST and ecological Token LUNA.

Ordinary investors are able to possess Luna and UST with limited funds.

III. Decentralized “Grayscale” – BlackHole DAO

Grayscale, New Grayscale Luna and Decentralized Grayscale Blackhole DAO: A Revolution Battle for the DeFi World

BlackHole DAO (BHO) is the most representative decentralized asset management protocol of DeFi 3.0.

BlackHole DAO is a decentralized asset management protocol based on DAO governance. Resting on DeFi 2.0, a new standardized model is constructed with the aim to utilize the decentralized asset management protocol to build decentralized “Grayscale”.


BlackHole DAO and Grayscale are the same in that no assets entered into the asset management pool are allowed to be redeemed. Transactions can only be realized by the redeemed Grayscale Trust shares (BHO tokens).


Differences between BlackHole DAO and Grayscale:


  1. Different management methods

Grayscale is a centralized management team for asset management, while BlackHole DAO uses a decentralized asset management protocol to manage assets in all asset pools.


  1. Different decision makers

Grayscale is a digital asset category held according to the decisions of the centralized management team, and BlackHole DAO is a digital asset category preferred through voting of the decentralized autonomous community organization (DAOs).


  1. Different asset pools

Grayscale includes the unique and limited digital asset category carefully selected by the centralized management team, while BlackHole DAO, recommended by communities, covers all (such as NFT and metaverse land and game props) released digital asset categories (As of now, there are about 18,000 digital asset categories issued globally).


  1. Different investment logic

One is active investment, in which asset managers rely on expertise to select specific assets and obtain excess returns from active decision-making that outperform market trends.


The other is passive investment, in which asset managers are only responsible for asset allocation and gain long-term benefits from the trend growth of the market itself.


Grayscale is an active investment behavior in which a professional management team selects specific tokens to be held, while BlackHole DAO recommends all issued digital assets through the communities. It can be seen as a passive ETF covering all digital assets already issued in the world.


  1. Different vision

The vision of Grayscale is to serve more traditional investment institutions and become the largest trust management institution in the crypto world. The vision of BlackHole DAO is to establish more sub-communities (DAOs) through autonomous organizations to discover and recommend all digital asset categories already issued on the whole network. It aims to allow every ordinary investor to become the partner of the decentralized “Grayscale” BlackHole DAO, and share the beautiful life brought by asset appreciation.

Grayscale, New Grayscale Luna and Decentralized Grayscale Blackhole DAO: A Revolution Battle for the DeFi World

Undoubtedly, the developers of Grayscale, “New Grayscale” Luna and decentralized grayscale Blackhole DAO have ushered in innovations and changes for the DeFi world. They all share one common goal, which is to be a pioneer and leader in the field of digital asset management in order to offer more professional and accessible digital asset management services for investors in the blockchain industry.