New alliance launches to connect DeFi projects with Chicago crypto trading firms

Quick Take

  • Volt Capital, Jump Capital, CMT Trading and DRW Trading have launched the Chicago DeFi Alliance (CDA), an organization that brings Chicago-based trading firms and DeFi projects together
  • To bootstrap liquidity, many DeFi startups seek to onboard trading firms and professional traders. However, they don’t necessarily understand these trading firms’ needs and concerns in DeFi
  • CDA hopes to bridge this gap and help DeFi startups find resources and build products that can tap into the liquidity that these trading firms represent

A group of Chicago-based crypto trading shops is coming together to connect more closely with Open Finance (DeFi) projects.

Volt Capital, Jump Capital, CMT Trading and DRW Trading launched today the Chicago DeFi Alliance (CDA. The organization, announced late Tuesday in a blog post, seeks to bring together the Chicago-based trading firms and DeFi projects from the world.

Inaugural members of the alliance include TD Ameritrade, DV Trading, Arca, dYdX, and Compound. 

The alliance aims to help DeFi projects understand the Chicago trading ecosystem, a major financial hub famous for its derivatives market. As DeFi projects look to bootstrap liquidity and onboard professional traders, CDA provides them a platform to communicate with trading firms, liquidity providers, and over-the-counter desks. 

"I decided to join the CDA because I see a significant knowledge gap between the DeFi startups I talk with on a daily basis, and my colleagues at Jump Trading and other trading firms in the industry. My hope is that the CDA can help close that gap by helping DeFi startups understand where there are (and are not) real potential opportunities to work with trading firms and involve them in the DeFi ecosystem," said Jump Capital head of fintech investing Peter Johnson. 

Each DeFi startup will be paired with a mentor and go through a four-to-six-week program to learn about trading firms' needs in DeFi. The end goal, according to Volt Capital general partner Imran Khan, is for these startups to have a clear idea of what products they could build and the resources they might need to attract firms from the trading realm. 

"What we want out of this is at the end of, say, four weeks is we want startups to be better at understanding what types of products they're building, understand what the path to liquidity is, and understand whether they need additional resources like talent," Khan told The Block. 

Meanwhile, CDA also provides a channel for trading firms to learn more about DeFi. According to Khan, although many trading firms are interested in DeFi, a lack of thorough understanding of the various protocols and concerns such as the security of assets have kept many on the sideline. 

"A part of this alliance is to also educate traditional trading firms about DeFi… So it's more, I would say, a dual funnel where we're helping DeFi companies get liquidity and feedback, but then also from the traditional trading side, it's to understand the DeFi space better. It is an education funnel, and [it helps] bridging that liquidity back to DeFi," said Khan.

Update: a previous version of this story incorrectly stated that Jump Trading is a member of CDA. The post has since been updated to reflect that Jump Capital, instead of Jump Trading, is a CDA member. 

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