- The strategy plans to invest in 20 to 30 of the top proof-of-stake tokens
- The fixed-income-style play features risk exposures that can be dialed up or down at the discretion of limited partners
The firm behind what it has dubbed the first evergreen, tokenized venture capital fund is aiming to raise some $200 million for a new vehicle that plans to bet on staking opportunities as Ethereum’s long-awaited Merge nears.
COSIMO Ventures started trading the strategy for the fund, COSIMO Y, with internal capital earlier this year, Managing Partner Rob Frasca told Blockworks. The plan is to hold a first close on limited-partner funds in the third or fourth quarter on an expected initial capital constraint of about $1 billion.
COSIMO has been drawing interest from both crypto-native and traditional finance investors, including family offices, for its latest venture. The strategy entails backing 20 to 30 of the largest proof-of-stake validating mechanisms, as well as related derivatives to hedge downside market risk. Portfolios can be assigned three risk profiles to dial up or down what is essentially a fixed-income approach that, removing the hedging, can have a heavy beta lean.
The main goal, however, is to trade with as much of a delta-neutral approach as possible.
“The entire world is moving to proof-of-stake — and so are we,” Frasca said.
The fund — which is partnering with several custodial staking providers — offers monthly withdrawals that are subject to 30-day notice. Limited partners have the ability, if they so choose, to reinvest proceeds on a quarterly basis, a tactic Frasca calls “coin-stacking.”
Considering COSIMO Y does not back in yield-farming aspects of DeFi or put investor capital to work in more esoteric corners of crypto markets, Frasca said the approach is designed to minimize the chance of counterparty risk — which industry participants say is most always on the minds of traditional institutional investors looking to do due diligence on digital asset strategies.
The fund is fully denominated in US dollars. Returns are broken down between dollar-driven showings and coin accumulation. At launch, limited partners can contribute only in fiat, but COSIMO plans to add the ability to invest via in-kind staked assets down the line.
The team, including Frasca, has deep experience in traditional derivatives trading, as well as digital assets and internet-oriented startups.
“We’ve been getting a lot of excitement from big institutions, pension funds guys who want to be in crypto, but don’t want to call the bottom,” he said. “They know they want to be in the market, but need to be hedged.”