00:00This is not an unusual agreement between market making firms like Jump Trading. All that means
00:06is that they're stepping in to make sure that there's always trading. They're facilitating
00:12the buying and selling. When there is a position, a yes or no contract, they're stepping in to take
00:19the other side. And they're not the only firm that's doing this. Of the big institutional
00:23players, Susquehanna is another trading firm that is present not just in prediction markets,
00:30but you know them from other asset classes, equities, options, futures. So Jump, this
00:36agreement today that we are reporting on is mostly about them being a partner to these prediction
00:43market platforms. They're saying we will provide liquidity. We will trade on your platforms. And
00:49in exchange, we're going to take a small stake, an equity stake in these growing companies.
00:55This is an asset class that is really in early days. So having partners like Jump Trading
01:01is important for them in order to keep that momentum going and make sure that there's going
01:06to be strategic venture capital that is growing on both sides.
01:11Okay. So prediction markets need market makers like Jump Trading, like Susquehanna. How many
01:16firms do exchanges tend to need? Are two enough? Is 10 enough? What does it look like?
01:22So what's interesting about prediction markets is right now, the liquidity has not gotten to the
01:26point at all where we're reaching, let's say, if you were thinking about the equity markets or futures,
01:32but you do need both the big institutions like the ones that you're mentioning and smaller players.
01:40So for example, in prediction markets, you have trading firms and even a few people in their
01:45basement that are trading predictions on weather contracts. And they're developing this expertise
01:51around certain areas. So it could be sports, it could be other pop culture moments. And so it's a
02:00different asset class. It's not these firms that are starting out like Jump, like Susquehanna,
02:07they have to make sure that they can develop an expertise that is outside of what they're used to
02:14in equity and other more institutional or traditional marketplaces.
02:20Kat, before we let you go, speaking of tradition, is it another example of what Scarlett talks about
02:24all the time, which is like TradFi actually getting into this new asset class? And I'm not saying
02:30prediction markets are an asset class. What I'm saying is that a lot of times these are built on
02:34the rails of cryptocurrencies. And is it a way for TradFi to get exposure to crypto?
02:39I do think so. And what's interesting, if you talk about Jump, they had Jump crypto. And so they're
02:45used to playing in not just crypto markets, but as a venture firm, they invest in blockchain technology.
02:53They're used to really jumping before everyone else is. So they're, I would say,
02:59an early player in a asset class like crypto. And right now you're seeing it in prediction markets.
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