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Three Arrows Capital-Affiliated Crypto Firm Raises $100 Million for New Liquid Token Fund – Here’s What You Need to Know

Sead Fadilpašić
Last updated: | 3 min read
Source: AdobeStock / NicoElNino

DeFiance Capital has reportedly raised $100 million for its liquid token fund.

The Block reported that the crypto investment firm completed the first close of the new fund, citing “two sources with direct knowledge of the matter”. 

The company confirmed the news by retweeting the news story on its official Twitter account, as did its founder, crypto investor Arthur Cheong, who wrote

“Crypto generally peak on unbridled optimism, bottom on hopeless pessimism. No better time to invest.”

The sources told the news outlet that the company raised “eight figures,” adding that the initial raise came in under $50 million. 

As for the investors who decided to back the fund, there was reportedly “a good mix” of them, including crypto funds, family offices, and certain existing investors as well. reached out to DeFiance for comment. 

What is DeFiance Capital?

Founded in 2020, DeFiance Capital is a Web3 and crypto-focused investment firm, claiming “many successful investments across DeFi, Web3 gaming, and infrastructure space.”   

It has backed projects such as Aave, dYdX, Lido, Axie Infinity, Layer Zero, Offchain Labs (Arbitrum), and others.

It, however, got hit by the major blow that was the bankruptcy of the crypto hedge fund Three Arrows Capital (3AC), and soon distanced itself, claiming to be a separate company operating independently. 

As reported in July last year, DeFiance Capital said it was “materially affected” and “prejudiced” by the liquidation of rival fund 3AC. It also claimed that CEO Cheong had “no visibility” on Three Arrow Capital’s financial statements or conditions.

Soon after, in September, the news came out that the company was in the process of raising $100 million for a “Liquid Venture Fund,” and that it had already raised nearly half of the targeted amount by that point. 

‘Best Opportunities are Already Liquid’

There has been increasing talk within the crypto sphere and beyond for a while now about liquid tokens and liquid token funds.

Pantera Capital has its own Liquid Token Fund launched in 2017, describing it as “a multi-strategy vehicle that typically invests in 10-20 liquid tokens at any point in time.” It adds that the fund is “predominantly driven by a discretionary strategy” focused on DeFi and adjacent assets.

According to the Head of Growth at on-chain liquidity protocol Bancor, Nate Hindman, “a Liquid Token is a smart contract which acts as an automated market maker by regulating the buying and selling of a token along a predetermined price curve, with a single pool of collateral to back it up.”

Therefore, the higher a liquid token’s reserve ratio, the greater its price stability, Hindman argued, and added that,

“This new form of automated liquidity has the potential to transform the way users tokenize digital items, communities, ecosystems and more.”

And many praised DeFiance Capital’s latest move, such as Adam Cochran, partner at Cinneamhain Ventures and a contributor to several DeFi projects, 

Meanwhile, The Block claimed to have obtained a draft article written by DeFiance, suggesting that the fund’s goal is to get the tokens that are trading below venture round valuations. 


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