Valkyrie Investments, one of the largest cryptocurrency asset managers, has announced that an on-chain defi fund will be launched next week. Because of the location of the assets that will be available to earn yield in several protocols, this new fund would be significantly different from other, similar offerings. This initiative has already received a $100 million investment.
Valkyrie Launches an On-Chain Defi Fund
Valkyrie Investments announced yesterday the creation of their first on-chain defi fund, which will hold a portfolio of defi blue chips. The location of its funds distinguishes this fund from similar offerings. While other funds passively track asset prices, Valkyrie proposes to hold the assets on-chain. This means they will be able to earn yield and passive income by positioning these assets in various protocols.
Valkyrie’s managing director of defi, Wes Cowan, stated:
This allows us to benefit from the upside while also gaining additional yield from lending, liquidity pools, farming, and staking in the defi ecosystem. We receive the appreciation as well as the compounded yield from on-chain defi participation.
The fund will begin with a $100 million investment from a group of investors and the firm’s general partners.
Stablecoins and Exotic Chips
Decentralized finance is a large and diverse movement that is present on several cryptocurrency chains. While other investors appear to be more inclined to invest in established protocols such as Ethereum, Valkyrie’s proposal appears to be more daring. Cowan confirmed this when he listed the chains in which this fund intends to invest. Cowan stated:
Blockchains such as Ethereum, Avalanche, Solana, Binance Smart Chain, Matic, and Fantom present numerous opportunities.
While this does not necessarily imply that they will invest in native tokens in these environments, the mention of some of these options is intriguing and demonstrates the growth of some of these chains. However, the portfolio’s composition, including which tokens and in what proportions they will be held, is still unknown.
Cowen acknowledged that stablecoins could play a significant role in the portfolio, saying:
Even in stablecoins, however, they are always deployed on-chain to generate yield.
The launch of this fund may spark a trend that encourages other players to deploy their assets on-chain in order to earn yield from positioning them, but it also introduces new risks to those who invest in the fund.