Grayscale Onchain Vaults: Potential Entry into Traditional CLO Market

Grayscale evaluates Onchain Vaults as the next generation financial product in the digital asset market, stating that they have a structure similar to traditional collateralized loan obligations (CLOs). Onchain Vaults are projected to be blockchain-based financial products that could expand into traditional finance, following stablecoins, tokenized assets, and perpetual futures. The Onchain Vaults pool investors' funds to manage portfolios and distribute cash flows generated from underlying assets back to investors, operating directly on the blockchain network through smart contracts. As of the end of July, a total of $7.26 billion in total value locked (TVL) is tied up in 3,008 Onchain Vaults operated by 57 curators, with approximately 79% of the total vaults managed primarily with stablecoins. In contrast, the traditional CLO market is valued at $1.5 trillion, with over 250 managers operating thousands of products. Grayscale pointed out that the uncertainty of U.S. securities regulations remains a significant challenge, but assessed that Onchain Vaults are likely to become a key investment tool in the digital asset credit market.

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