The new funds by the California-based manager will invest directly in one of two large-cap tokens: AAVE, of the non-custodial lending protocol; and UNI, from the decentralized exchange Uniswap. Both are the largest DeFi protocols of their type.
Bitwise, which manages over $1 billion in crypto bets, had previously limited its pure-play funds to bitcoin and ethereum – plus a smattering of thematic indexes, including one for DeFi. Launching aave and uni funds is in line with investor demands, according to CIO Matt Hougan.
Hedge funders – at least those with an appetite for crypto – have been warming up to the DeFi markets this year. A May study by consultancy PwC estimated that 31% of crypto hedge funds have used decentralized exchanges to execute trades and more than a quarter were invested in AAVE.
The tokens’ respective protocols have been surging for the better part of a year as investors of all stripes dug deeper into the crypto ecosystem. Aave’s lending tool boomed – up more than 70x since July 2020 with $6.9 billion in loans on platform. Uniswap’s trading platform processed over $60 billion in transactions in June alone.
SEC filings reviewed by CoinDesk show the AAVE fund, which was operational as early as April, had over $92 million in sales by the end of that month. A spokesperson said both funds contain “meaningful assets” but declined to provide details.