Jump Trading to Earn Stakes in Polymarket, Kalshi via Liquidity Deals: Bloomberg

Global trading firm Jump Trading will earn small equity packages in leading prediction markets Polymarket and Kalshi in exchange for providing liquidity to their markets, according to a report from Bloomberg. 

Citing people familiar with the matter, the report indicates that the firm’s agreement with Kalshi is for a fixed equity position, while its stake in Polymarket can grow depending on the size of its market-making activity. 

That equity could amount to a sizable sum for Jump Trading, as the pair of prediction platforms notched valuations of at least $11 billion and $9 billion, respectively, in recent months.

Those valuations could grow in the near future, as new survey data indicates that 31% of Americans believe that prediction markets are likely to become a “bigger, more important part of culture.” (Disclaimer: Decrypt’s parent company, Dastan, operates the prediction market platform Myriad.)

In contributing to that growth, Jump will provide trading or market-making services for the platforms. In other words, the firm will contribute liquidity or money to market offerings in order to allow for consistent trading of the available markets. 

This liquidity is necessary because prediction markets are “peer-to-peer” exchanges, meaning that individuals need to be on each side of a prediction. For example, if a user wishes to predict that the New York Knicks will win an NBA basketball game, another user must maintain a position in their opponent. 

Jump, which operates its trading services in traditional equities as well as crypto, has 20 employees trading prediction markets, according to the Bloomberg report. 

A representative for Jump Trading did not immediately respond to Decrypt’s request for comment. 

In December, the firm was sued for $4 billion in U.S. Federal Court, accused of “unlawfully profiting” from the collapse of the Terra ecosystem in 2022. 

Other major trading firms, like Susquehanna International Group, have found their way into the prediction market sector as well. The Philadelphia-based firm partnered with Robinhood (HOOD) to acquire a majority stake in derivatives exchange LedgerX, a move that signals the brokerage and finance app may ultimately launch its own prediction offerings, utilizing its own liquidity. Currently, Robinhood partners with Kalshi for its in-app prediction market product.