Crypto hedge funds managed nearly $3.8 billion in 2020, up from $2 billion in 2019, and are showing a taste for decentralized finance (DeFi), according to a new report from PwC and the Alternative Investment Management Association (AIMA).
Released Monday, the third annual Global Crypto Hedge Fund Report, co-authored by Elwood Asset Management, shows that 31% of crypto hedge funds use decentralized exchanges (DEXs), with Uniswap being the most widely used (16%), followed by 1inch (8%) and SushiSwap (4%).
Meanwhile, DeFi-specific tokens are on the rise: oracle service Chainlink’s LINK (+18.46%) was included in 30% of hedge fund investments, with interoperability protocol Polkadot’s DOT (+2.87%) and lending platform Aave’s AAVE (+13%) making up 28% and 27%, respectively.
The DeFi space has seen explosive growth in recent months, with the total value locked in Ethereum-based DeFi platforms now sitting at $60 billion, according to DeFi Pulse.
Meanwhile, some large traditional hedge funds like Steven Cohen’s Point72 are reported to be taking an interest in DeFi, as part of a strategy of setting up crypto-focused funds.