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deeds


Total Posts: 478
Joined: Dec 2008
 
Posted: 2020-06-09 21:58

ETHE US EQUITY (Grayscale Trust with 1 year lockup) trades at a premium to underlying ETH.

Old link below for context, it's maybe 8.8x todayish?

https://cointelegraph.com/news/grayscale-ethereum-trust-trading-at-515-premium

I'm not understanding, could someone suggest why? (Nikol?)

nikol


Total Posts: 1124
Joined: Jun 2005
 
Posted: 2020-06-10 06:53
I'm not into ETH, but there is something about switch from ETH to ETH2 this summer.
Vitalik says it's huge advantage, so market must buy.

deeds


Total Posts: 478
Joined: Dec 2008
 
Posted: 2020-06-10 09:13
Thanks, Nikol, much appreciated

I would have guessed that would drive ETH prices inside and outside the trust equally unless the trust provides some advantage in that event.

There doesn't appear to be any special protections or redemption features in the trust to drive the prices apart.

Will report if anything comes to light

nikol


Total Posts: 1124
Joined: Jun 2005
 
Posted: 2020-06-10 10:06
This seems to be good faq.
https://consensys.net/knowledge-base/ethereum-2/faq/

The change from PoW to PoS implies the necessity to own ETHs. So, likely that's why.

nikol


Total Posts: 1124
Joined: Jun 2005
 
Posted: 2020-06-10 15:36
Same people are also buying BTC at pace exceeding production (mining) rate

https://cointelegraph.com/news/grayscale-is-now-buying-15-times-the-amount-of-bitcoin-being-mined

"We are all ears"

PS. Weird things happen. If life goes this way, ETH will rise up quickly.

https://mobile.twitter.com/glassnodealerts/status/1270663177617977344

deeds


Total Posts: 478
Joined: Dec 2008
 
Posted: 2020-06-11 10:30


"The change from PoW to PoS implies the necessity to own ETHs. So, likely that's why."

This is helpful to understand demand for the underlying of Grayscale's trust.

What i don't understand is why demand for shares in the trust are price at such a high premium to the underlying, given Grayscale takes 2.5% pa plus other trust expenses, provides no protections, no redemption, no guarantees, really (can't find anything to indicate any special terms).

Why not just buy ETH?

Are people buying the ability to transact within a day after a one year lockup? (is it just transaction frictions?)

Grayscale's air gap?

Is there a weird premium for enforcing self control (like the way small bottles of coke or other treats are priced higher at a smaller portion control size)? ; )

Preppers with tax advisors? (The premium rocketed up in February 2020)

"Same people are also buying BTC at pace exceeding production (mining) rate"

Interestingly premium for their bitcoin trust is substantially lower and lower increase since feb 2020 (supporting the extra ETH-->ETH2 driver as a component).


Issue is that purchasers of Grayscale's trust units have to mark their books for their investors. How to think about the premium over the lockup period when the only traded indication is unrestricted and wildly higher than the underlying for as yet (to me) unexplained reasons?




nikol


Total Posts: 1124
Joined: Jun 2005
 
Posted: 2020-06-11 21:17
1. I'm not into ETFs either. Just have some idea about lockups, Npv, reporting time etc.
2. My brain's fuse is blown up trying to figure out the terms of the contract you just described. Usually, when I try to explain complex problem to the counterpart, I figure out solution on the halfway.

svisstack


Total Posts: 346
Joined: Feb 2014
 
Posted: 2020-06-25 22:52
https://www.theblockcrypto.com/post/69553/grayscale-ethereum-trust-price-june

First Commander of the USS Enterprise

nikol


Total Posts: 1124
Joined: Jun 2005
 
Posted: 2020-06-28 13:21
Triggered by this discussion I spotted another info:
- Grayscale owns 400k BTCs
- typical dormant level is 85-90%, which leaves us with ~1800-2700k BTCs in free float.
- so, if Greyscale is actively trading BTCs = non-dormant) then they can significantly influence the price.
- usually, 10% move is "inspired" by just 10k BTC or less. So, you can get an idea of the power of Grayscale.
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