<p>Mike Novogratz's Galaxy Digital has become a minority shareholder in venture firm ParaFi Capital to jointly co-invest in the decentralized finance (DeFi) space.</p> <p>ParaFi <a href="https://www.prnewswire.com/news-releases/parafi-capital-the-defi-focused-asset-management-firm-announces-strategic-investment-from-galaxy-digital-301139426.html">said</a> Galaxy's strategic investment (undisclosed) would help drive further adoption of DeFi, especially among institutions. ParaFi's other investors include Bain Capital Ventures and Henry Kravis, co-founder of private equity giant KKR &amp; Co.</p> <p>ParaFi began investing in DeFi in 2018, and its portfolio includes leading protocols such as Uniswap, Compound, Aave, and Synthetix. As of August 31, ParaFi had more than $100 million in assets under management.</p> <p>In addition to investing in DeFi protocols, ParaFi is also a liquidity provider and a governance participant. Andreessen Horowitz (a16z), for instance, delegated its crypto fund's Compound governance rights to ParaFi.</p> <p>"DeFi represents the nascent architecture for a new, open financial network...As DeFi approaches an inflection point, we look forward to partnering closely with the Galaxy team," said ParaFi founder and managing partner Ben Forman.</p> <p>Novogratz <a href="https://www.bloomberg.com/news/articles/2020-09-29/novogratz-plows-ahead-in-defi-amid-the-gamifying-of-crypto">told</a> Bloomberg that DeFi protocols would eat into many intermediaries' businesses in a few years. "We want to stay close to the cutting edge. My instinct is, this is a really important part of the ecosystem," said Novogratz.</p> <p>Galaxy's current exposure to DeFi is about 5% of its capital, said Novogratz. </p>