During an interview, the chief investment officer at Fairfax County Police Officers Retirement System Katherine Molnar explained that the profit from the ‘yield farming’ strategy could be attractive now that many others have pulled out of the game.
Her statement stems from the ongoing plans to convert Virginia County’s $6.8 billion pension fund for crypto lending aka ‘yield farming’.
The Fairfax County Retirement Systems, a public pension fund responsible for putting together retirement services, recently received approval from its Board of Trustees to invest in crypto lending.
The strategy will be that investors lend out their cryptocurrencies to crypto-inclined projects for a period after which they receive a fixed payment stream as returns. The retirement service provider considers this a method to augment returns and deepen its roots in the digital market.
Market Downturn Forces Crypto Lenders Out of The Game
Important to realize is the fact that this same market that the pension fund wishes to enter, is the same that led to the downfall of many crypto giants.
In June, crypto lender Babel Finance became overwhelmed by its lending operations in the midst of harsh market conditions and recorded losses even in proprietary trading. Therefore, Babel had to put a pause on its withdrawal and redemption services to ensure it does not succumb to unusual liquidity pressures.
Next was Celsius, another crypto lender which bowed to market pressure, suspended withdrawal on its platform, and eventually declared bankruptcy.
Singaporean crypto lender Vauld Group was not left out of the market heat, the lender also announced the suspension of withdrawals, trading, and deposit transactions on its platform. Consequently, most of them filed for Chapter 11 and Chapter 15 Bankruptcy as the case may be while others are uncertain of their next move.
Undeterred, Fairfax County Retirement Systems already put in $35 million each at VanEck’s new finance income fund and Parataxis Capital’s digital yield fund. Katherine Molnar sees the exit of these crypto lenders from the market as an opportunity in disguise. In her own words;
“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.”