$6.8B Fairfax County Pension Fund Invests $70M in Yield Farming

A Virginia pension fund worth $6.8 billion has invested in crypto lending markets in a bid to boost returns. Following recent approval from its board of trustees, the Fairfax County Retirement Systems is expected to begin investing in yield farming. This comes despite a downturn in the general crypto market.

The decline of the crypto industry has been a deterrent for many from investing.  In recent months, both institutional and retail investors have incurred severe losses. A major catalyst for the nosedive is the $40 billion collapse of the Terra stablecoin in early May. Some major financial institutions have fallen into bankruptcy, including crypto lending firms Celsius Network, Voyager, and the Three Arrows Capital hedge fund.

Chief Investment Officer at the  Fairfax County Police Officers Retirement System, Katherine Molnar explains:

“Some of the yields that you’re able to achieve in a yield farming strategy are really attractive because some of the people have stepped back from that space […] For those that are still willing to provide liquidity, decent profit seekers, they’re actually able to earn more attractive yields at the moment”.

Fairfax recently made two $35 million investments in multi-strategy digital asset investment firm Parataxis Capital and the VanEck New Income Fund. This despite its Canadian counterpart Caisse de dépôt et placement du Québec’s (CDPQ) $150 million loss after the Celsius Network was forced to cease operations and file for bankruptcy.

Prior to its interest in DeFi, the firm had invested in crypto in 2019 with its County Employees’ Retirement System investing $10 million and the Police Officers Retirement System investing $11 million into Morgan Creek’s Blockchain Opportunities Fund.

“We started in venture capital and private equity,” said Andrew Spellar, Fairfax County Employees Investment Chief. “But once we got more comfortable in the space, we started to think a bit broader about how we might be able to use strategies in digital assets in other parts of the portfolio.”

The funds expect that even with an anticipated 50% loss due to current market conditions, their investment would still be up 350%.  “We are still convicted in our original thesis. Things will bounce back and the stronger technologies will probably survive,” said Molnar.

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