The next few days will see a decision made, which would be the first time pension fund money was utilized in decentralized finance.
Fairfax County, which is located in Northern Virginia, has already invested a portion of its pension funds in cutting-edge cryptocurrency and blockchain firms. It’s now considering expanding its role in decentralized finance (DeFi) yield farming.
The chief investment officer at the Fairfax County Police Pension System, Katherine Molnar, stated on Tuesday at the Milken Institute Global Conference that the system will aim to finance two new crypto-focused hedge fund managers in the next three weeks. The following few days will be decisive in determining whether pension fund money would be invested in DeFi for the first time.
Molnar claimed that Fairfax has already invested pension funds in seven crypto bets across two pension funds, including venture capital and one structure that holds early-stage illiquid tokens and later-stage liquid tokens. One of the seven categories is a hedge fund that utilizes various strategies in cryptocurrency, including yield farming, basis trading, and cross-exchange arbitrage.
The blockchain and cryptocurrency sector is no stranger to Fairfax County. It began investing pension fund cash in cryptocurrencies in 2019, with projected returns of 9%. Fairfax’s crypto assets make up roughly 8% of its entire portfolio.
The company’s top executive made a statement about the agency’s blockchain-related investments, noting that it had put money into the Morgan Creek Blockchain Opportunities Fund. The Employees’ Retirement System (ERS) promised to invest $10 million, whereas the Police Officers Retirement System (PORS) promised to put up $11 million. Molnar compared yield farming to a fixed-income replacement or a higher return than rate-sensitive investments.
The United States topped the 2021 Global DeFi Adoption Index, which ranks nations according to their level of grassroots adoption. The index tracks the most popular countries. DeFi’s popularity is increasing in countries with a greater level of financial stability, as well as high-income nations where cryptocurrency usage already exists. The addition of Fairfax to the market only adds further evidence for United States’ DeFi adoption.