Solana logo displayed on a phone screen and representation of cryptocurrencies are seen in this illustration photo taken in Krakow, Poland on August 21, 2021. (Photo Illustration by Jakub Porzycki/NurPhoto via Getty Images)
NurPhoto via Getty Images
Digital asset investment giant Grayscale is launching a new product offering exposure to one of the hottest digital assets today, Solana. Revealed exclusively to Forbes, the Solana Trust will be the 16th offering in Grayscale’s expanding product line that caters to institutional and high-net worth investors.
It is easy to see why Grayscale would offer exposure to Solana. Though its performance was muted this month as part of the overall market volatility, the blockchain’s native token SOL is still one of the best performing assets of 2021, especially among major cryptocurrencies, up 687% year to date. These returns dwarf those of some of its major competitors, such as Ethereum, Algorand, Cardano, Polkadot, which are all vying to be the dominant home for decentralized finance applications, NFT trading, and blockchain-based gaming. Its only other major competitor to offer a similar return is Avalanche, which has grown 680% in 2020 but has a fraction of Solana’s market capitalization ($62.32 billion v. 26.97 billion).
Solana is also the preferred network of 29 year-old billionaire Sam Bankman-Fried, founder of crypto exchange FTX and the richest person in the industry with a net worth of $26.5 billion. His frequent and public endorsement of the network has been invaluable in boosting its public profile among developers and investors.
Solana has outpaced its competitors year to date
“In many investors’ minds, there’s a continued appetite to invest in Solana,” says Grayscale CEO Michael Sonnenshein. “In some sense, it is a more cost-effective blockchain [than Ethereum], and today we are seeing over 500 decentralized apps and about 1.2 million monthly active users on the network. When you kind of take a step back, and you see how quickly it has been able to ramp up, it’s certainly pretty impressive.”
In fact, institutional money has been flowing into Solana for several months at this point. According to new data from the London-based asset manager, Coinshares, approximately $250 million has been invested into SOL-based exchange-traded products (ETPs) in total, $42.2 million of which has flowed only this month. The company wrote in a research report dated November 29, “In terms of inflows relative to assets under management (AuM), Polkadot and Solana continue to be the winners, with inflows representing 8.6% (US$11.5m) and 5.9% (US$14.6m) of AuM respectively last week.” Most of these funds (over $190 million) are invested with a similar product from the Switzerland-based 21shares, which launched on June 29, 2021.
However, performance and investor …….