Grayscale Pivots to DeFi and AI Tokenization in Q3 Portfolio Rebalancing

Grayscale Investments has updated its portfolio allocations for three of its crypto-focused funds in the third quarter of 2025, introducing Aerodrome Finance (AERO) to the Decentralized Finance (DeFi) Fund and Story (IP) to the Decentralized AI Fund. The rebalancing, effective October 3, 2025, aligns with index methodologies from CoinDesk and reflects evolving market dynamics in decentralized finance and artificial intelligence infrastructure. The DeFi Fund replaced MakerDAO (MKR) with AERO, while the AI Fund added IP, a token associated with the Story Protocol, to diversify exposure to AI-related protocolsGrayscale Investments® Announces Rebalancing of Multi-Asset Funds for Third Quarter 2025^[1].

The DeFi Fund's updated portfolio now holds six components, with Uniswap (UNI) at 32.32%, Aave (AAVE) at 28.07%, Ondo (ONDO) at 19.07%, Lido (LDO) at 7.02%, Curve (CRV) at 6.92%, and AERO at 6.60%. The removal of MKR and addition of AERO underscore the fund's adherence to the CoinDesk DeFi Select Index, which periodically adjusts holdings to reflect sector trendsGrayscale Investments® Announces Rebalancing of Multi-Asset Funds for Third Quarter 2025^[1]. The DeFi Fund's shares continue to trade at premiums or discounts to their net asset value (NAV), a pattern observed historically, as the fund has not yet met its objective of mirroring the value of its componentsGrayscale Investments® Announces Rebalancing of Multi-Asset Funds for Third Quarter 2025^[1].

The Smart Contract Fund (GSC Fund) retained its core holdings but adjusted weightings to align with the CoinDesk Smart Contract Platform Select Capped Index. Ether (ETH) and Solana (SOL) remained the top allocations at 30.32% and 30.97%, respectively, followed by Cardano (ADA) at 18.29%, Avalanche (AVAX) at 7.57%, Sui (SUI) at 7.35%, and Hedera (HBAR) at 5.50%. These changes aim to balance exposure across major blockchain networks supporting decentralized application developmentGrayscale Investments® Announces Rebalancing of Multi-Asset Funds for Third Quarter 2025^[1].

The AI Fund's rebalancing added IP to its portfolio, which now includes NEAR Protocol (NEAR) at 25.81%, Bittensor (TAO) at 22.15%, IP at 21.53%, Render (RENDER) at 12.91%, Filecoin (FIL) at 11.39%, and The Graph (GRT) at 6.21%. The inclusion of IP aligns with the fund's focus on protocols addressing centralized AI challenges and infrastructure for decentralized AI services. Grayscale's decision to integrate IP reflects growing institutional interest in tokenized intellectual property (IP) ecosystems, as highlighted by the Story Protocol's role in the $80 trillion global IP market.

All three funds operate without generating income, distributing components to cover expenses, which leads to a gradual reduction in the number of assets per share over timeGrayscale Investments® Announces Rebalancing of Multi-Asset Funds for Third Quarter 2025^[1]. The DeFi Fund's ongoing volatility and the AI Fund's nascent stage-launched in July 2024-underscore the risks inherent in these products, including regulatory uncertainties and market price swingsGrayscale Investments® Announces Rebalancing of Multi-Asset Funds for Third Quarter 2025^[1]. Grayscale emphasized that none of the funds are registered under the Investment Company Act of 1940, and their shares may not secure secondary market listings.

The rebalancing underscores Grayscale's strategy to adapt to shifting market priorities, such as the integration of real-world assets into DeFi and the tokenization of intellectual property in AI. These moves align with broader institutional trends toward hybrid financial models that blend blockchain innovation with traditional asset classes. However, investors are cautioned to consider the long-term risks, including regulatory scrutiny and the extreme price volatility of digital assetsGrayscale Investments® Announces Rebalancing of Multi-Asset Funds for Third Quarter 2025^[1].