Hedge fund giants Millennium, Matrix and Point72 standing up DeFi funds

U.S. hedge fund giants Millennium Management, Point72 Asset Management and Matrix Capital Management are all at varying stages of standing up cryptocurrency-focused trading funds, according to three people with knowledge of the plans.

Not only are these traditional hedge funds setting up dedicated cryptocurrency investment vehicles, plans are afoot to start earning returns using decentralized finance (DeFi) platforms, according to the sources, who all asked to remain nameless.

“Point72 is standing up a crypto fund. They are probably six months away from launch with a product,” said one of the people. “Millennium is hiring operations people right now to build out a crypto fund, and Matrix has started to build out a crypto team as well.”

The term “DeFi fund” is being mentioned in connection with those hedge funds, the source added. 

DeFi is booming and institutions are edging towards it, trying to figure out how to get a slice of the alpha, or above-market returns, that is commonplace on platforms like Aave, Uniswap and Compound. Even Netherlands bank ING recently released a report diving into the DeFi sector.

Point72, whose entrance into the crypto space was reported earlier Thursday by The Block, declined to comment. Millennium and Matrix, which have largely flown under the radar until now, did not answer requests for comment.

Another of the sources, harking from the cryptocurrency custody world, said they were aware two of the hedge funds mentioned were entering DeFi, without stating which firms. The source said these funds were going beyond simply buying DeFi tokens.

“These very conservative, traditional hedge funds are not just looking to buy these tokens, but are interested in using these protocols,” said the source. “So they’re looking to trade on some of these decentralized exchanges. They’re looking to provide liquidity on some of these platforms to earn a yield on top of their positions.”

Millennium, the largest of the three, co-founded by fund manager and philanthropist Israel Englander, has close to $50 billion in assets under management (AUM).

Steven A. Cohen’s Point72 has about $17 billion in assets, while Matrix, launched by former Tiger Management trader David Goel, has AUM of around $10 billion.