Decentralized finance and blockchain investor ParaFi Capital (“ParaFi”) has received a strategic investment from an affiliate of Galaxy Digital Holdings Ltd. (TSX: GLXY) (“Galaxy Digital”), a leading financial services and investment management company in the cryptocurrency and blockchain technology sector founded by Mike Novogratz. With this transaction, Galaxy Digital has become a minority shareholder in the firm, joining other ParaFi investors including Bain Capital Ventures and Henry Kravis, Co-CEO and Co-Founder of KKR. As of August 31, 2020, ParaFi had assets under management of over $100 million.
“Galaxy Digital looks for first-class partners with which to develop the crypto ecosystem with us, and ParaFi’s like-minded investment team and sustained involvement in DeFi protocols and applications are a strong match for us,” said Mike Novogratz, Founder, Chairman and CEO of Galaxy Digital. “ParaFi shares our views on the transformative potential of DeFi, our urgency to help this space accelerate toward deeper product-market fit, as well as our collaborative, expertise-driven approach to venture capital.”
“Partnering with Galaxy Digital is an important milestone for ParaFi and the DeFi ecosystem as a whole,” said Ben Forman, Founder and Managing Partner of ParaFi. “Programmable finance is a ‘zero to one’ innovation enabled by blockchain, and DeFi represents the nascent architecture for a new, open financial network. Galaxy has a strong track record of facilitating institutional interest in cryptocurrency and digital assets, as well as in working closely with leading companies in both fintech and traditional finance. As DeFi approaches an inflection point, we look forward to partnering closely with the Galaxy team.”
ParaFi was founded by Ben Forman, previously an executive at private equity firms KKR and TPG. ParaFi began investing in DeFi in 2018, deploying capital behind leading protocols such as Compound (lending and interest accrual), Aave (asset borrowing), Uniswap (automated liquidity provision), and Synthetix (synthetic asset trading). In addition to investing in DeFi protocols, ParaFi actively supports its portfolio as a power user, liquidity provider, and governance participant. Examples of ParaFi’s sustained involvement in the DeFi community include Andreessen Horowitz delegating its crypto fund’s Compound governance rights to the firm, as well as ParaFi’s active participation in monetary policy on the MakerDAO network.
“As a case study for empowering consumers in financial services, Bitcoin successfully demonstrated the market’s demand for a digitally native, decentralized store of value. Now, as new decentralized finance applications begin to rapidly proliferate, the time is right to establish a nimble investment framework into DeFi architecture more broadly,” said Christopher Ferraro, President of Galaxy Digital. “To successfully invest in this nascent and accelerating space requires active management and deep, multi-disciplinary knowledge across financial markets, economics, early-stage investing, community building and technology—all qualities that we believe the ParaFi team possess in abundance. Together with Galaxy’s sector expertise and unique insight into DeFi token liquidity and markets through our Trading desk, we believe our partnership will be well-positioned to identify which applications and teams have the potential for exponential growth in DeFi.”