JPEG Trading's Kevin March on Tokenized Stocks, DeFi Lending, and the Future of Prediction Markets

**Kevin March** (0:00)
It has never been a better time to have a lot of energy in ideas. Never has someone been able to test more things and be more capable of taking something further. It's a force multiplier on anyone that has the energy to parse through the slop and get out like the diamonds in the rough. It's time to be alive.

**Sam Ewen** (0:27)
JPEG Trading is a global proprietary trading firm operating across cryptocurrency and DeFi markets specializing in providing liquidity.
Follow JPEG Trading on X for more. Hey, there. Sam Ewen from CoinDesk. We are here with Kevin March, founder of JPEG Trading. Kevin, I know we saw you at ConsenSys. I'm excited to have another conversation with you here. I think it's important for our audience to understand what it is that JPEG Trading is doing on a day-to-day basis. I don't think you'll recognize the number of firms that are trading in DeFi day-to-day compared to certain traditional markets. So give us a little bit of the Genesis story and what you guys do on a day-to-day basis.

**Kevin March** (1:05)
There are a great many trading firms in crypto. All of them use the same language. Unfortunately, that language is fairly imprecise. So let me try to fix that.
So JPEG Trading builds new markets for asset issuers. From first investment to liquidity for those assets, to underwriting those assets in curating opportunities for them on chain. The way we see our role in ecosystem is as an end-to-end partner to help new assets succeed in crypto.
That's definitely not where we started.
Where we started late 2023 or 2024, we were looking for an opportunity to sit in a room and create a magical algorithmic black box that produces cash flow on a day-to-day basis. And I'm happy to say that we succeeded with that. But that place in the ecosystem, particularly late 2023, a lot of the big trading firms have had exited crypto. A lot of them took big hits from FTX. And the myriad of other problems that happened in 2022 and 2023 And there was a gap in the market where we started getting a lot of approach by a lot of projects, looking for investment, looking for trading firm partners, looking for curation, those sorts of things. So it's something that we were adjacent to the space, so we kind of got pulled into it. And now our firm represents one of the best options. If you're looking to create a new asset in the space, there are two sides of it. You create the asset, and it needs to work. It needs to work very well. And you create the markets, and the markets need to work really well. And we can do that, that second piece, end to end.

**Sam Ewen** (2:46)
I wanna go back to the 2023 time, right? There's some insight that came out. You said, we wanna create this black box that makes money. Crypto seems to be often an answer for people who have that question. But I think it's harder than people think to actually figure out how to make this work, especially in the long term, as you're saying, a lot of people have exited.
What was the general thesis of like, what are we doing different that we think really allows us to succeed?

**Kevin March** (3:13)
I wish I could say it was a very well-articulated thought, and it wasn't. I wish I could say that I had this core insight, my partner John and I, that together we had created some slick invention that helps us do this. Realistically, that's not what it is.
We seek to have a very large surface area for luck. And how that comes about is be fast, be flexible, be creative, make good friends, have a lot of conversations, be willing to brainstorm on any topic. And the place and how JPEG evolved from there was mostly by luck. And it's because we've been out and we sought to create our luck. And we had a lot of conversations.
We tried to like suss out where the gaps in the market are. And there are enough people that sort of told us the same thing and asked for the same thing that they gave us the thought process that there's a gap in the market other than just us trying to build high-frequency trading algorithms to make money. Perhaps there's value to getting more hands on with how market formation happens in crypto, which is we got here haphazardly on the winding road. But in retrospect, the path to get here is pretty clear.

**Sam Ewen** (4:39)
I know you guys have focused a fair bit on DeFi, and I'm really interested specifically in the idea of lending. We've seen what Aave is doing, what Morpho is doing. There's a lot of great folks in this space. It feels like there's some things that are working and some things that are not in DeFi. So I think, can you give us a little bit on sort of how you guys are playing into that, especially on the lending criteria? I know you're using a little bit more of a unique approach of like, you're putting your own money in the game alongside your co-investors, but what are you trying to get out of that?