What is Grayscale?Grayscale is the company that created the ETHE product. Their website is https://grayscale.co/
What is ETHE?ETHE is essentially a stock that intends to loosely track the price of ETH. It does so by having each ETHE be backed by a specific amount of ETH that is held on chain. Initially, the newly minted ETHE can only be purchased by institutions and accredited investors directly from Grayscale. Once a year has passed (6 months for GBTC) it can then be listed on the OTCQX Best Market exchange for secondary trading. Once listed on OTCQX, anyone investor can purchase at this point. Additional information on ETHE can be found here.
So ETHE is an ETF?No. For technical reasons beyond my personal understandings it is not labeled an ETF. I know it all flows back to the “Securities Act Rule 144”, but due to my limited knowledge on SEC regulations I don’t want to misspeak past that. If anyone is more knowledgeable on the subject I am happy to input their answer here.
How long has ETHE existed?ETHE was formed 12/14/2017. GBTC was formed 9/25/2013.
How is ETHE created?The trust will issue shares to “Authorized Participants” in groups of 100 shares (called baskets). Authorized Participants are the only persons that may place orders to create these baskets and they do it on behalf of the investor.
How does Grayscale acquire the ETH to collateralize the ETHE product?An Investor may acquire ETHE by paying in cash or exchanging ETH already owned.
Where does Grayscale store their ETH? Does it have a specific wallet address we can follow?ETH is stored with Coinbase Custody Trust Company, LLC. I am unaware of any specific address or set of addresses that can be used to verify the ETH is actually there.
Can ETHE be redeemed for ETH?No, currently there is no way to give your shares of ETHE back to Grayscale to receive ETH back. The only method of getting back into ETH would be to sell your ETHE to someone else and then use those proceeds to buy ETH yourself.
Why are they not redeeming shares?I think the report summarizes it best:
Redemptions of Shares are currently not permitted and the Trust is unable to redeem Shares. Subject to receipt of regulatory approval from the SEC and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. Because the Trust does not believe that the SEC would, at this time, entertain an application for the waiver of rules needed in order to operate an ongoing redemption program, the Trust currently has no intention of seeking regulatory approval from the SEC to operate an ongoing redemption program.Source: Redemption Procedures on page 41 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
What is the fee structure?ETHE has an annual fee of 2.5%. GBTC has an annual fee of 2.0%. Fees are paid by selling the underlying ETH / BTC collateralizing the asset.
What is the ratio of ETH to ETHE?At the time of posting (6/19/2020) each ETHE share is backed by .09391605 ETH. Each share of GBTC is backed by .00096038 BTC.
Why is the ratio not 1:1? Why is it always decreasing?While I cannot say for certain why the initial distribution was not a 1:1 backing, it is more than likely to keep the price down and allow more investors a chance to purchase ETHE / GBTC.
I keep hearing about how this is locked supply… explain?As noted above, there is currently no redemption program for converting your ETHE back into ETH. This means that once an ETHE is issued, it will remain in circulation until a redemption program is formed --- something that doesn’t seem to be too urgent for the SEC or Grayscale at the moment. Tiny amounts will naturally be removed due to fees, but the bulk of the asset is in there for good.
The Trust’s ETH will be transferred out of the ETH Account only in the following circumstances: (i) transferred to pay the Sponsor’s Fee or any Additional Trust Expenses, (ii) distributed in connection with the redemption of Baskets (subject to the Trust’s obtaining regulatory approval from the SEC to operate an ongoing redemption program and the consent of the Sponsor), (iii) sold on an as-needed basis to pay Additional Trust Expenses or (iv) sold on behalf of the Trust in the event the Trust terminates and liquidates its assets or as otherwise required by law or regulation.Source: Description of Trust on page 31 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Grayscale now owns a huge chunk of both ETH and BTC’s supply… should we be worried about manipulation, a sell off to crash the market crash, a staking cartel?First, it’s important to remember Grayscale is a lot more akin to an exchange then say an investment firm. Grayscale is working on behalf of its investors to create this product for investor control. Grayscale doesn’t ‘control’ the ETH it holds any more then Coinbase ‘controls’ the ETH in its hot wallet. (Note: There are likely some varying levels of control, but specific to this topic Grayscale cannot simply sell [legally, at least] the ETH by their own decision in the same manner Coinbase wouldn't be able to either.)
Yes, but what about [insert criminal act here]…Alright, yes. Technically nothing is stopping Grayscale from selling all the ETH / BTC and running off to the Bahamas (Hawaii?). BUT there is no real reason for them to do so. Barry is an extremely public figure and it won’t be easy for him to get away with that. Grayscale’s Bitcoin Trust creates SEC reports weekly / bi-weekly and I’m sure given the sentiment towards crypto is being watched carefully. Plus, Grayscale is making tons of consistent revenue and thus has little to no incentive to give that up for a quick buck.
That’s a lot of ‘happy little feels’ Bob, is there even an independent audit or is this Tether 2.0?Actually yes, an independent auditor report can be found in their annual reports. It is clearly aimed more towards the financial side and I doubt the auditors are crypto savants, but it is at least one extra set of eyes. Auditors are Friedman LLP – Auditor since 2015.
The company’s auditors Friedman LLP were also coincidentally TetheBitfinex’s auditors until They controversially parted ways in 2018 when the Tether controversy was at its height. I am not suggesting for one moment that there is anything shady about DCG - I just find it interesting it’s the same auditor.
“Grayscale sounds kind of lame” / “Not your keys not your crypto!” / “Why is anyone buying this, it sounds like a scam?”Welp, for starters this honestly is not really a product aimed at the people likely to be reading this post. To each their own, but do remember just because something provides no value to you doesn’t mean it can’t provide value to someone else. That said some of the advertised benefits are as follows:
Why is there a premium? Why is ETHE’s premium so insanely high compared to GBTC’s premium?There are a handful of theories of why a premium exists at all, some even mentioned in the annual report. The short list is as follows:
Are there any other differences between ETHE and GBTC?I touched on a few of the smaller differences, but one of the more interesting changes is GBTC is now a “SEC reporting company” as of January 2020. Which again goes beyond my scope of knowledge so I won’t comment on it too much… but the net result is GBTC is now putting out weekly / bi-weekly 8-K’s and annual 10-K’s. This means you can track GBTC that much easier at the moment as well as there is an extra layer of validity to the product IMO.
I’m looking for some statistics on ETHE… such as who is buying, how much is bought, etc?There is a great Q1 2020 report I recommend you give a read that has a lot of cool graphs and data on the product. It’s a little GBTC centric, but there is some ETHE data as well. It can be found here hidden within the 8-K filings.Q1 2020 is the 4/16/2020 8-K filing.
Is Grayscale only just for BTC and ETH?No, there are other products as well. In terms of a secondary market product, ETCG is the Ethereum Classic version of ETHE. Fun Fact – ETCG was actually put out to the secondary market first. It also has a 3% fee tied to it where 1% of it goes to some type of ETC development fund.
Are there alternatives to Grayscale?I know they exist, but I don’t follow them. I’ll leave this as a “to be edited” section and will add as others comment on what they know.
Coinshares (Formerly XBT provider) are the only similar product I know of. BTC, ETH, XRP and LTC as Exchange Traded Notes (ETN).
It looks like they are fully backed with the underlying crypto (no premium).
Denominated in SEK and EUR. Certainly available in some UK pensions (SIPP).
As asked by pegcity - Okay so I was under the impression you can just give them your own ETH and get ETHE, but do you get 11 ETHE per ETH or do you get the market value of ETH in USD worth of ETHE?I have always understood that the ETHE issued directly through Grayscale is issued without the premium. As in, if I were to trade 1 ETH for ETHE I would get 11, not say only 2 or 3 because the secondary market premium is so high. And if I were paying cash only I would be paying the price to buy 1 ETH to get my 11 ETHE. Per page 39 of their annual statement, it reads as follows:
The Trust will issue Shares to Authorized Participants from time to time, but only in one or more Baskets (with a Basket being a block of 100 Shares). The Trust will not issue fractions of a Basket. The creation (and, should the Trust commence a redemption program, redemption) of Baskets will be made only in exchange for the delivery to the Trust, or the distribution by the Trust, of the number of whole and fractional ETH represented by each Basket being created (or, should the Trust commence a redemption program, redeemed), which is determined by dividing (x) the number of ETH owned by the Trust at 4:00 p.m., New York time, on the trade date of a creation or redemption order, after deducting the number of ETH representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust (converted using the ETH Index Price at such time, and carried to the eighth decimal place), by (y) the number of Shares outstanding at such time (with the quotient so obtained calculated to one one-hundred-millionth of one ETH (i.e., carried to the eighth decimal place)), and multiplying such quotient by 100 (the “Basket ETH Amount”). All questions as to the calculation of the Basket ETH Amount will be conclusively determined by the Sponsor and will be final and binding on all persons interested in the Trust. The Basket ETH Amount multiplied by the number of Baskets being created or redeemed is the “Total Basket ETH Amount.” The number of ETH represented by a Share will gradually decrease over time as the Trust’s ETH are used to pay the Trust’s expenses. Each Share represented approximately 0.0950 ETH and 0.0974 ETH as of December 31, 2019 and 2018, respectively.
Buy Bitcoin in Exchange ‘X’ in USD; Sell Bitcoin in Exchnage ‘Y’ and make EUR; Convert EUR to USD and transfer USD back to Exchange ‘X’. I hope this covers the basics of triangular arbitrage in cryptocurrency. Before investing in this, there are certain things you have to keep in mind. As every thing has both effects and side ... An arbitrage opportunity exists for consumers that have access to credit in US dollars (a regulation arbitrage based on existing access to KYC-ed accounts, etc.). Arbitrageurs can borrow USD at a rate below 8%, transfer these US dollars on Coinbase to buy USDC and then lend USDC on Dharma. Yet, this arbitrage is subject to specific risks. For instance, the loan may never be matched on Dharma ... In general, you want to get at least 2% of the difference from each arbitrage trade you make. Let's drop it in a real case for better understanding. We have used an account worth of 10,000 USD to complete the arbitrage deal between Bitfinex and Kraken exchanges (half funds in fiat and the other half in Bitcoin). The average gain from the trade ... arbX is a cryptocurrency investment platform that operates an arbitrage fund and OTC trading fund over a P2P bitcoin bank called BTCPOP. The company made headlines in July for suffering a complete loss of funds from its investment accounts. It’s unclear what the future holds for arbX, although the company’s website is still advertising as normal. If Tether’s price goes above USD 1, let’s say to USD 1.01 on an exchange, traders would move USDT from an exchange where the price is still at USD 1, and sell as much Tether as possible until the price goes back to USD 1. Likewise, if Tether is at USD 0.99 on an exchange, traders will buy as much as possible until Tether’s price goes back to USD 1. This is called arbitrage, and it is ... Now, Binance allows its users to buy certain cryptocurrencies with USD and Euro using a credit card. Once you have funds in cryptocurrency, you can seamlessly trade in over 200 altcoins that Binance lists. Also, if you use Binance’s native coin (BNB) for trading, then you can take advantage of discounted fees as well. Funds Security of your information and your cryptoassets is our first priority. What is Arbitrage? When you buy BTC or any other currency on an exchange where the price is lower, you can make a profit by selling on an exchange where the price is higher. How does it work? We offer a very simple and intuitive interface that will allow you to become an expert trader. You can easily configure ... The most basic approach to cryptocurrency arbitrage is to do everything manually – monitor the markets for price differences and then place your trades and transfer funds accordingly. However, there are several cryptocurrency arbitrage bots available online, designed to make it as easy as possible to track price movements and differences. Online or mobile trading apps, such as Blockfolio ... On Bitsgap’s arbitrage bot, you can trade over 1000 cryptocurrency pairs, including ETH/USD, LTC/USD, XRP/USD, EOS/EUR. The arbitrage bot is cloud-based—not on your computer. So it’s easy to update without any input from the trader. You also get an easy-to-follow setup guide that allows you to create your bot trading strategy in a few minutes. There is no doubt that many of you have heard of cryptocurrency arbitrage, and have probably even wanted to conduct financial deals on such popular exchanges as Binance or Bitfinex. In this article, Applicature will reveal what Bitcoin arbitrage is in reality, how it works, and how to benefit from peaks in the crypto market.
[index]          
Cryptocurrency arbitrage trading #14: taking advantage of ETHUSD quanto convexity and low funding - Duration: 18:32. Accurate Cryptocurrency Information 31 views New You can buy Bitcoin, Ethereum, Litecoin, Ripple, or Bitcoin Cash with USD or EUR on Binance. Buy Crypto on the worlds biggest exchange with credit: Binance! Binance is a global cryptocurrency ... 🚨 MEGA BITCOIN BLUEPRINT SALE 🚨 https://www.btcblueprint.com 🔥 Up To $600 Discount - Limited Time 🔥 🔲 My Top 3 Recommended Exchanges 🔵 Phemex http ... How to do a SEPA transfer to coinbase from your online banking. Euro payment is cheap (bank fees vary) and can go through in as little as 3 hours. Wie kaufe ich IOTAs? Seitdem Bitfinex nicht mehr funktioniert, nutzen wir jetzt Coinbase.com und Binance.com. 10 USD (ca. 8,50 EUR) kostenlos in Bitcoins ges... Wenn Sie beispielsweise Bitcoins von Coinbase zu Binance transferieren, dann ja. Aus diesem Grund empfehle ich Ihnen dafür Etherium zu nutzen. Beim Transfer von 100 Euro sparen Sie so schon 12,62 ... Kraken is a popular cryptocurrency exchange which allows you to trade for many different cryptocurrencies and supports Fiat (USD/Euro) deposits/withdrawals. ... Kraken Bitcoin Exchange Tutorial. In this video, I show you how to buy your first Bitcoin using the Kraken exchange. I also walk you through how to deposit and withdraw your funds. Auf großen professionellen Kryptobörsen wie Bitfinex habt ihr auch die Möglichkeit eure Krypto Guthaben tageweise anzulegen und dafür Zinsen zu bekommen.Diese Vorgehen nennt sich Funding. Die ... How to Buy Bitcoin on Binance US & Store in a Ledger Nano X ... How to SHORT or LONG Bitcoin with Leverage BINANCE FUTURES TUTORIAL - Duration: 13:32. sunny decree 51,914 views. 13:32 ...