Crypto asset manager Valkyrie Investments will launch a decentralized finance (DeFi) fund next week with $100 million behind it, designed to give investors safe and easy exposure to the fast-growing industry.
Valkyrie Investments last month received the blessing of the U.S. Securities and Exchange Commission (SEC) to launch a bitcoin futures exchange-traded fund (ETF). By adding a DeFi fund, Valkyrie joins the likes of Galaxy Digital, which recently launched a DeFi tracker fund.
However, Valkyrie’s “On-Chain DeFi Fund,” which goes live on Nov. 22, holds its assets on-chain and therefore goes some way beyond Galaxy’s passively managed DeFi fund, according to Valkyrie’s Managing Director of DeFi, Wes Cowan.
“This allows us to participate in the upside while also gaining additional yield from lending, liquidity pools, farming and staking in the DeFi ecosystem,” Cowan said via email. “We get the appreciation plus the compounded yield generated from on-chain DeFi participation.”
In terms of what mix of DeFi platforms the Valkyrie fund will invest in, the list is long, Cowan said, and includes most major DeFi protocols. “We see a lot of opportunities on blockchains including Ethereum, Avalanche, Solana, Binance Smart Chain, Matic and Fantom,” he wrote.
The $100 million came from existing Valkyrie investors, plus the firm’s general partners are all investing directly into the fund as well. The fund targets accredited investors in the U.S. and the majority of international countries, Cowan said.
In terms of assessing risk associated with DeFi investing, Cowan said the firm’s investment counsel works to determine what percentage of the portfolio should be in stablecoins. “Though even when in stablecoins, they are always deployed on-chain to generate yield,” he added.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.