Jump Trading's Dave Olsen on the key building blocks for a crypto market maker

Episode 13 of Season 4 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Dave Olsen, President & Chief Investment Officer at Jump Trading Group.

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This episode is brought to you by our sponsors Fireblocks, Coinbase Prime & Chainalysis
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Jump Trading is one of the deepest-pocketed firms operating in the crypto market. 

Jump put its full scale on display earlier this month when the firm stepped up to cover hundreds of millions of dollars in losses after Wormhole—a DeFi project to which Jump contributes code—was hacked. In this episode of The Scoop, Jump president and CIO Dave Olsen explained how the firm reacted to the hack and market-bought more than $300 million in ETH to cover the losses.

"This was not a syndicate or a group of folks that pool resources to go out and purchase 120,000 ether," he said, explaining:

"We did debate that but what led to such a swift conclusion was what we felt that we would have a bigger impact on the community by immediately being able to tell everything that their assets were backed one-to-one and step up and kind of lead the community."

Once a secretive equities trading operation, Jump Trading has become more public-facing in a bid to grow its presence in the crypto market.

During this episode, Olsen dove into details that have not been historically talked about publicly—including Olsen's view on what is important in market making in both crypto and traditional markets.

In Olsen's view, connectivity to as many venues as possible is one of the three "building blocks" for being successful as a market maker. 

"You've got to be involved and connected to and able to trade pretty much everywhere that instrument trades," he said. 

In addition to connectivity, you also need ample capital, he said. "So connectivity, scale, and then the ability to analyze all the information you're getting and translate that into your best prediction of what should the price be for that asset at that moment in time? Those are really the three building blocks.”

During this episode Olsen and The Block's Frank Chaparro also unpack:

  • Why the crypto market is less deterministic than other financial markets and how that influences its market structure
  • How Jump went about re-starting the Wormhole network after the hack
  • Why the firm is still bullish on Solana
  • Jump's "agnostic" approach to hiring 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Frank Chaparro covers the intersection of financial markets and cryptocurrency as Editor-at-Large. Since joining the publication in 2018 as its first reporter, he has played a key role in building The Block into a leader in financial journalism and research. He leads special projects, including The Block's flagship podcast, The Scoop. Prior to The Block, he held roles at Business Insider, NPR, and Nasdaq. For inquiries or tips, email [email protected]

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