Next spot ETF positive? Grayscale plans to launch AAVE ETF and list on NYSE Arca, accelerating DeFi compliance process

Global leading cryptocurrency asset management firm Grayscale has taken another significant step toward product compliance. According to documents filed with the U.S. Securities and Exchange Commission (SEC) on Friday, Grayscale has officially submitted an application to convert its existing closed-end AAVE trust into a spot exchange-traded fund (ETF) listed on NYSE Arca.

This move not only marks Grayscale’s accelerated expansion into mainstream decentralized finance (DeFi) tokens following Bitcoin and Ethereum but also brings the concept of an AAVE ETF into the mainstream regulatory spotlight. Such applications often have a notable impact on market sentiment. According to the latest data from Gate, as of February 14, 2026, driven by this news, AAVE’s price surged +7.36% over the past 24 hours, currently trading at $120.04, with trading volume rising to $4.4 million. Its market capitalization has also increased to $1.82 billion, indicating a clear shift toward bullish market sentiment.

Application Details: 2.5% Sponsorship Fee and Coinbase Custody

Grayscale’s application is not without precedent but continues its strategic move to ETF-ify its single-token trust product line. As early as December 2025, Bitwise had submitted multiple ETF applications including AAVE strategies, but Grayscale, leveraging its strong brand and previous SEC settlement experience, is quickly catching up.

According to the filings, the proposed conversion of the Grayscale AAVE ETF follows the structure of its Bitcoin ETF:

• Fee Structure: A 2.5% fee based on net asset value (NAV), paid in AAVE tokens rather than cash, making Grayscale a potential long-term holder of the token.
• Custody Partnership: Coinbase is designated as the custodian for the underlying AAVE tokens and as the primary broker, ensuring compliance and security of assets.
• Listing Venue: The plan is to list on NYSE Arca. Once approved, this will provide traditional investors with a compliant channel to access the Aave ecosystem without directly holding or managing DeFi tokens.

Aave Protocol and AAVE Token Market Performance

As a leading lending protocol in DeFi, Aave’s total value locked (TVL) has long dominated the market, once exceeding 51% market share. AAVE, as the core governance and utility token of its ecosystem,’s value capture ability is closely tied to protocol activity.

In the same week that Grayscale submitted its application, the Aave community also underwent significant governance changes. Recently, Aave Labs proposed the “Aave Will Win” framework, which plans to allocate 100% of protocol revenue to the DAO treasury and establish Aave V4 as the core technical foundation. These positive developments resonate with the ETF application, creating a “multiple narrative” effect.

From the price trend perspective, according to Gate data as of February 14, 2026:

• Spot Price: $120.04 (+7.56% over 24 hours)
• Key Levels: A high of $120.53 and a low of $109.82 within 24 hours.
• Liquidity Data: 24-hour trading volume of $4.4 million, indicating increased market attention driven by major news.

Although the current price remains well below the April 2021 all-time high of $661.69, AAVE has still gained +5.12% over the past 7 days, demonstrating resilience at the bottom.

Impact on the Crypto Market: From “Store of Value” to “Productive Asset” Expansion

Grayscale’s successful conversion of Bitcoin Trust (GBTC) and Ethereum Trust into ETFs not only opened compliance pathways but also paved the way for other similar products in the U.S. The application for AAVE may have even deeper symbolic significance:

• Regulatory Indicator: If the SEC approves a spot ETF based on DeFi tokens, it signals that regulators are beginning to recognize “productive assets” (assets that generate yield or have governance functions) within a compliant framework. This could set a strong precedent for other tokens.
• New Institutional Access: For pension funds and hedge funds restricted from direct on-chain interactions, purchasing ETF shares listed on NYSE offers a convenient way to gain exposure to DeFi. This could bring incremental capital to AAVE.
• Market Narrative Shift: Over the past year, AAVE’s price has declined by -53.21%. The ETF application process may help shift the market narrative from “bear market oversold rebound” to “value re-evaluation driven by compliance.”

Future Outlook and Price Predictions

While Grayscale’s application opens up imagination, SEC review remains uncertain. Bitwise’s ETF is expected to become effective around March 2026, and if Grayscale follows this timeline, approval may come in the second quarter of 2026. During this period, market sentiment will mainly be influenced by macroeconomic factors and the development of the Aave protocol itself.

Long-term valuation models suggest that with DeFi revival and increased institutional adoption, AAVE has potential for valuation recovery. According to Gate’s market analysis, the average price target for AAVE in 2026 is approximately $120.04. As the ecosystem matures, the price center could gradually rise to $230.85 by 2031, offering significant upside potential from current levels.

It’s important to note that short-term prices may still be volatile. After reaching a 24-hour high of $120.53 today, profit-taking pressure could emerge. Investors should monitor the support level at $109.82; if this level holds, the upward trend may continue.

Summary

Grayscale’s application to convert the AAVE trust into an ETF marks a milestone for DeFi’s integration into mainstream finance. It not only injects confidence into the AAVE token itself but also signals that the convergence of crypto assets and traditional finance is expanding from Bitcoin and Ethereum into broader blockchain applications. As a leading crypto trading platform, Gate will continue to monitor the development of this application and provide real-time market data and in-depth analysis.