Research by JZL Quantitative Agency: Jump Trading – a traditional quantitative giant in the encryption world

image descriptionDistribution of Crypto head quantitative institutions (including traditional cross-border)

image descriptionArrangement of Crypto head quantitative institutions (including traditional cross-border)

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Wintermute– The top Defi market-making giant who has "fallen from the altar"

1.  backgroundbackground: Defi started and is committed to solving the obstacles that prevent crypto from becoming a "mainstream financial" existenceInsufficient liquidity and inefficient use of funds

2.  2 core issues;: Participate in project investment + lending + provide market-making services, provide liquidity support for DEX and project tokens, and participate in unsecured lending on decentralized lending platforms to provide powerful funds for its business in CEX, DEX and even Ventures Assure;

3.  portfoliotechnology stack

4.  technology stack：We are a Linux based company and the solution will be built in Python and should "talk to" C++ stack；

5.  financing historyfinancing history

6.  : Accumulatively completed 4 rounds of financing, disclosing that the financing amount exceeded 23 million US dollars, and more than 10 investors including Lightspeed Ventures, Pantera Capital, Fidelity, Blockchain.com, and Coinbase Ventures participated;core team

7.  : Composed of "traders + software engineers", with a strong background in Optiver (a global leading quantitative institution established in the Netherlands in 1986);crisis

: In the second half of 2022, two more serious hacking incidents were encountered in succession, and the resulting chain reaction caused Wintermute to face a severe liquidity crisis

• In 1999, two former Chicago Mercantile Exchange (CME) floor traders Bill DiSommaandPaul Gurinasand

• Established Jump Trading, one of the world's top quantitative trading institutions led by research;Automated trading is the general trend of the future。"While Jump got its start on the trading floor in the open-outcry environment, we are now fully committed to taking advantage of the opportunities offered by electronic trading" – From Jump Trading Web site.

  

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• Jump Trading is not just an SEC-registered broker-dealer (Broker-Dealer), it has increased its deployment in venture capital, decentralized finance and on-chain governance:

1. Jump Trading

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• Business coverage Trading varieties cover stocks, options, futures, ETFs, fixed-income securities, Cryptocurrencies, etc. For example: According to the SEC filing, the order flow amount paid by Jump Trading to Robinhood accounted for 17% of Robinhood's 2021 revenue (Citadel Securities accounted for about 30%), and Jump Trading's encryption business has been the backbone of Robinhood crypto. Trading provides liquidity;

2. Jump Capital

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• In 2012, Bill, Paul, Sach Chitnis and Michael McMahon co-founded Jump Capital, a VC investment agency, focusing on investing in data-driven technology companies in the fields of financial technology, IT and data infrastructure, B2B SaaS and media;

• According to the data disclosed by FINRA, Jump Trading described it as “Jump Capital, LLC is an exempt reporting advisor and shares common beneficial ownership with jump trading, LLC.”;"A lot of corporate venture funds, their number one goal is not to make money. It is to serve their corporate parent, while we are here to make money. If we did not make money, we failed." – from Peter Johnson, partner and fintech investments lead；

• In August 2021, Jump Capital completed the seventh round of investment fund raising of US$350 million, 40% of which will be invested in fields such as DeFi, financial applications, blockchain infrastructure and Web 3.0;

  

• In February 2022, Jump Capital partners Sach Chitnis and Michael McMahon published an article introducing investment ideas for 2022 from five directions. Prior to this, Jump Capital had participated in the financial information service platform Tradingview and institutional digital asset financial service providers respectively Bitgo and TRM Labs, a provider of cryptocurrency regulatory technology services;

  

3. Jump Crypto

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• Jump Crypto comes with the trading experience and technical advantages accumulated by Jump Trading in more than 20 years. It focuses on deep cultivation in the field of blockchain infrastructure and tools, and invests in blockchain ecological start-up projects. As shown in the figure below, 2022 is the investment of Jump Crypto In the year of the outbreak, as of the press date, it has invested in 40 projects;

  

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• The internal division of labor is clear and clear, cooperate with each other, and fully participate in the investment, development, lending, liquidity provision and token market-making business related to the project.

  

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• Team composition and operation mode

• People come from: Jump brings together data research experts from the world's top universities, experienced technical developers, and members of the International C++ Standards Committee, etc. More than 85% of employees have a background in mathematics/physics/computer, and more than 50% have a doctorate;Campus cooperation: According to UIUC News, Jump Trading established a cooperative relationship with The Department of Computer Science as early as 2010, launching the Jump Trading Scholars program to reward outstanding academic performance and innovative thinking in the emerging field of algorithmic trading Excellent talents, in addition to providing full scholarships for the fourth and fifth years, provide opportunities for internships and exchanges in Jump Trading.；

  

  

• Unfortunately, the first batch of 2 students who won the award did not join Jump TradingOperation mode:Internally divide dozens of trading teams, each responsible for researching, developing, operating and maintaining its own strategy,；

• Share the company's technology platform and hardware infrastructurePosition arrangement: There are mainly 4 types of positions, namely、Algo Trader、Software Engineerandand. Among them, algorithmic traders are relatively comprehensive. They understand products and can also do data mining/machine learning, develop strategies, and write codes; R&D engineers are mainly system architects, focusing on researching low-latency systems; software engineers are responsible for conventional software system development ; Data Engineers are responsible for processing data from different sources for use by the trading group.

core staff

• core staff

• Kanav Kariya - From Intern to Head of Jump Crypto

• Thanks to the intern project between Jump Trading and UIUC Research Park, Kanav Kariya, who has a background in Computer Engineering, joined the Jump Trading team as an intern in 2017, and joined Jump Trading as a Quantitative Researcher after graduation;

In September 2021, Kanav Kariya was appointed by Jump Trading as the head of Jump Crypto, leading Jump Crypto to participate in project investment and market-making activities in the encryption field, and providing data and technical support for the construction of a decentralized ecosystem. A cryptocurrency platform that updates prices in milliseconds.

• Agency RatingBa1On March 11, 2022, Moody updated its rating on the outstanding debt of Jump Trading's parent company, Jump Financial LLC,

• The corporate family rating (CFR[1]) and Ba2[2] rating of existing debt are Non-Investment Grade, and the overall outlook is stable. Similar to Jane Street, Jump Financial LLC has been given a "BB-" rating by S&P at both the issuer and debt level;

• Up to now, Jump Financial LLC has 1 outstanding loan with a cumulative amount of 500 million US dollars. Borrowers include Bain Capital Credit, Carlyle Global, Credit Suisse, Manulife Financial and other institutions. Compared with Jane Street, which has $3.05 billion in outstanding debt, Jump Financial LLC is relatively restrained in the capital market;

According to Moody’s rating disclosure, Jump Financial LLC’s borrowing is used in two directions: increase its trading capital and for general corporate purposes;

1. Moody's concerns about Jump Financial LLC are reflected in:

2. Expansion into new geographies and/or asset classes (such as cryptocurrencies), maintaining its high-quality employee base and corporate culture, and potentially greater challenges in terms of control and oversight;

In the case of expanding more complex and longer-term trading strategies, it may lead to risks such as increased income fluctuations and reduced overall liquidity of the investment portfolio, resulting in potential asset losses to creditors;

1. Moody's rating adjustment criteria for Jump Financial LLC:

2. Upgrade: Expand low-risk auxiliary business, continuously improve its profitability, optimize and enrich the quality of cash flow, etc.;

Downgrade: Significant decline in profitability, major transaction losses or risk control failures, reduced asset liquidity or increased leverage, and any adverse changes in corporate culture or management quality, etc.

Rating reference and weight

• Key projects

1. As we all know, Jump is the main contributor to the Terra ecology and Solana ecology, and one of the biggest victims of the Terra and Wormhole incidents;

1. Major Collaboration Project – Terra (Big Loss)

2. Jump Crypto, 3AC, Hashed, and Delphi Digital are known as Terra's "Four Protectors", investing heavily in Terra's ecological project investment and saving Terra's death spiral;Jump Crypto and 3AC led LFG's US$1 billion financing to help UST establish foreign exchange reserves denominated in BTC. According to the LFG announcement,；

3. The LUNA tokens held by Jump Crypt through this round of investment have a 4-year lock-up periodIn addition, Jump Crypto also used the Terra arbitrage mechanism in the UST anchor defense battle,Exchange the 640 million UST extracted on Curve into 221 million LUNA to help UST anchor

2. , and distributed 221 million LUNAs to 5 validators including Hashed.

   Main Collaborative Project – Python

   Pyth is an oracle project based on Solana, jointly invested by Alameda Research and Jump Capital. According to GitHub, Jump Trading is the main code contributor to the project. At the same time, together with Genesis Global Trading, FTX and other institutions, as a data provider for Pyth, it provides Pyth with high-fidelity data in encrypted assets and traditional financial fields;

   i. Jeff Schroeder: Jump Trading technical lead (Technical Lead), top Linux geek, mainly responsible for the core code of Pyth;

   ii. Samir Islam: Jump Trading Technical Lead (Technical Lead), high-frequency trading system development, Master of Computer Science at Oxford University, participated in the development of Pyth code;

   iii. Evan Gray: Vice President of Engineering at Jump Trading, involved in the development of Pyth code;

3. iv. Alex Davies: Head of Production Engineering of Jump Trading, one of the top 10 employees of Jump Trading Europe, involved in the development of Python code;

1. Major Collaboration Project – Wormhole (Big Loss)

2. In August 2021, Jump Trading acquired Certus One, the cross-chain protocol Wormhole development team;

3. In February 2022, the cross-chain protocol Wormhole was hacked and lost 120,000 wETH. Jump Crypto intervened in time to "rescue the field" and "made up for the damaged 120,000 ETH for damaged customers at their own expense. Wormhole was back online a day later. ;

   Regarding this hacking incident, CertiK made the following suggestions to Wormhole developers:i. When developers use externally dependent functions,；

   ii. Need to have enough understanding of this functionStay tuned for important updates to externally dependent codebases

   , make corresponding adjustments to your own code base in a timely manner when there are major version changes;iii. When the code version is updated, it is also necessary to conduct a comprehensive audit in a timely manner,。

And update the audited code to the code that has been deployed on the chain in time

• job setting

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about Us

JZL Capital is a professional organization registered overseas, focusing on blockchain ecological research and investment. The founder has rich experience in the industry. He has served as the CEO and executive director of many overseas listed companies, and has led and participated in eToro's global investment.

The team members are from top universities such as University of Chicago, Columbia University, University of Washington, Carnegie Mellon University, University of Illinois at Urbana-Champaign and Nanyang Technological University, and have served Morgan Stanley, Barclays Bank, Ernst & Young, KPMG, HNA Group , Bank of America and other well-known international companies.

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contact us

We are always looking for creative ideas, business and cooperation opportunities, and we also look forward to your reading feedback, welcome to contact hello@jzlcapital.xyz.

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