In a rapidly expanding, ever-evolving industry like cryptocurrency, there are many ways to make a profit. For some, it’s the tried-and-true method of buying and hodling an asset long term. For others, it’s short-term trades that take advantage of price fluctuations. Those who already possess substantial holdings may opt to run a masternode to earn profits. Each of these investment approaches can be taken with Dash, and one’s selection will depend on any number of factors such as risk-tolerance, access, and personal preference. For Dash holders seeking an alternative way to yield returns, staking is an option.
This year, Valkyrie Investments Inc. began offering Dash staking through its Valkyrie Dash Trust (VDASH). Valkyrie is a specialized, alternative asset management firm that offers investors exposure to cryptocurrencies through traditional investment vehicles – vehicles such as trusts. A trust is an investment vehicle that is professionally managed by asset managers to yield positive returns for investors in a secure manner. Valkyrie operates several single-asset cryptocurrency trusts including Bitcoin and trusts for several other assets, including Dash. Dash was added because, as Valkyrie Chief Investment Officer Steven McClurg puts it, he wanted to release products for “under-the-radar altcoins where developers are building better technologies and decentralized applications.” Before delving further into VDASH, it’s important to understand the fundamentals of staking.
Staking is the process of taking one’s crypto assets and committing them to the network in order to verify transactions and support the network of the cryptocurrency. In return for staking, participants earn a reward on their staked balance over time. It is a way to earn passive income on crypto holdings. To better understand staking, simply compare staking a crypto to depositing money into a traditional savings account. In both cases, an individual holds one’s coins or funds for a period of time, earning a return. VDASH will provide individuals and institutions an opportunity to stake Dash in exchange for rewards from the network. VDASH offers a 2.5% to 4% return on investment. The rate represents the estimated staking yield after expenses, in addition to the value from any price appreciation on Dash itself. The trust structure of VDASH provides a number of benefits to investors wishing to .
Firstly, the minimum investment required through the trust is much lower than operating one’s own masternode. The minimum investment required to run a masternode is 1,000 Dash (currently valued at $187,570), while the minimum required investment for VDASH is only $25,000. This also means that fractional masternode exposure is possible, even for those wishing to operate primarily their own masternodes. For example, an investor with 1,500 Dash could operate one masternode on their own if they wished, and earn incremental income on the remaining 500 Dash through the Valkyrie Dash Trust.
Because VDASH is a trust, it offers a highly secure way to invest in Dash. It is the trust itself that holds the crypto assets, through a qualified third-party custodian. This means there’s no need for investors to worry about keys, wallets, or storage – all of which are professionally managed by Valkyrie – thus making it easier for investors and institutions to add Dash exposure to their portfolios in a secure manner.
Next, Valkyrie assumes tax preparation responsibility, providing investors with annual tax statements on their capital gains and masternode income. This makes tax preparation significantly easier for investors compared to a self-hosted masternode. There are also benefits for users with specific investment goals or situations. For example, investments in VDASH can be accessed through an Individual Retirement Account (IRA). While it is possible to create a self-directed IRA to invest directly in Dash, there are significant administrative burdens of self-directed IRAs that might make them unappealing for many investors. In addition, beneficiaries can be named, making the transfer of assets to beneficiaries more straightforward. New York residents, who are subject to the state’s restrictive cryptocurrency regulations, can gain exposure to Dash for the first time.
Finally, Valkyrie provides investors with quarterly statements, enabling proof of ownership for an investor’s Dash balance. This is beneficial for investors wishing to prove balances to third parties when, for example, applying for a mortgage or qualifying for other forms of credit. To invest in VDASH, certain requirements must be met. As previously stated, there is a minimum $25,000 investment. Contributions to the trust can be made via Dash or U.S. bank wires. Interested participants must also be Accredited Investors. There are several ways to qualify as an Accredited Investor, as defined by the SEC. Accredited Investors must meet at least one requirement regarding their income, net worth, professional experience, or institutional structure (in the instance of institutions).
If you feel any of the benefits of the trust structure are beneficial to your situation and wish to learn more about the Valkyrie Dash Trust, we encourage you to visit the Valkyrie website or submit an application to learn more about the trust.
Author: Ryan Taylor