• The fund’s management team sees opportunities to invest in Ethereum, Avalanche, Solana, Binance Smart Chain, Magic and Fantom, among other protocols
  • Upcoming launch to come after the firm brought to market the second-ever bitcoin futures ETF in the US

Amid Valkyrie Investments’ push to build out a suite of crypto ETFs, the firm is getting set to launch a $100 million hedge fund focused on decentralized finance.

The Valkyrie On-Chain DeFi Fund invests in a couple of dozen protocols across 13 different blockchains, Wes Cowan, the firm’s managing director of DeFi, told Blockworks in an email. The offering’s management team believes opportunities exist across most major DeFi 1.0 and 2.0 protocols, including Ethereum, Avalanche, Solana, Binance Smart Chain, Magic and Fantom.

Set to launch on Nov. 22, it will be available to accredited investors in the US, as well as abroad, and a total of $75 million has already been secured. In addition to investing in DeFi tokens, the fund will hold assets on-chain.

“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 explained.

The offering was co-founded by Cowan, as well as Valkyrie Vice Chairman Will McDonough, who has previously worked in senior roles at Goldman Sachs and Avenue Capital.

“The fund was launched in response to demand from existing clients and investors, who also happen to make up the bulk of the launch funding,” Cowan noted.

A Goldman Sachs report published last month stated that DeFi is easier to access for underbanked populations and provides faster settlements for users. Authors Zach Pandl, co-head of foreign exchange strategy for Goldman Sachs Research, and Isabella Rosenberg, a foreign exchange analyst at the company, noted however that DeFi is still a work in progress with flaws like hacks, bugs and “outright scams.”

The hedge fund follows Valkyrie’s launch of its Bitcoin Strategy ETF (BTF). The bitcoin futures-based product was the second such ETF to hit the US market behind only the ProShares Bitcoin Strategy ETF (BITO). 

BTF is meant to be “the first in a family of crypto and crypto-adjacent ETFs,” Valkyrie CEO Leah Wald previously said. The fund group, along with a handful of other issuers, awaits approval from the US Securities and Exchange Commission (SEC) for its proposed bitcoin ETF that would directly hold the crypto asset. 

The firm also filed earlier this month to launch the Valkyrie Bitcoin Miners ETF and the Valkyrie US Innovative Balance Sheet ETF. Both funds are actively managed, but neither would invest directly in bitcoin. 

About a week earlier, the firm withdrew its application for a leveraged bitcoin futures ETF at the SEC’s request.

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  • Ben Strack is a Denver-based reporter covering macro and crypto-native funds, financial advisors, structured products, and the integration of digital assets and decentralized finance (DeFi) into traditional finance. Prior to joining Blockworks, he covered the asset management industry for Fund Intelligence and was a reporter and editor for various local newspapers on Long Island. He graduated from the University of Maryland with a degree in journalism. Contact Ben via email at [email protected]