Why Kalshi's John Wang Says Perps Are 'the Most Pure Trading Instrument'

**John Wang** (0:00)
Yeah, well, Terry, Terry is obviously a titan of the financial industry.
So we at Kalshi have a lot of respect for what the CME Group have done. But, you know, I think there is particular points. We at Kalshi are building like this, like we're bringing this perpetual futures instrument and we're building it in the same kind of framework that they, the CME, for example, and many other derivatives and futures exchanges in the US that are regulated by the CFTC. We're bringing it under the same framework that they are. And so the risk models that we've been employing are, for example, like very similar or kind of model off of industry precedents. So, you know, I think leverage, I think was another point that he was mentioning, like how perpetuals are kind of like a leverage product, but on the CME and CBO and other types of exchanges, there are futures products which have like much higher leverage than the perpetual futures we're offering on our platform. So, I don't think by any means we're offering like an instrument that is like very, very different from like a risk perspective compared to like the largest derivatives that are currently trading and available to US customers on the other largest derivative exchanges.

**Laura Shin** (1:17)
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Today's guest is John Wang, head of crypto at Kalshi. Welcome, John.

**John Wang** (2:33)
Thanks Laura for having me.

**Laura Shin** (2:36)
Kalshi, which is the largest prediction market in the US, just brought the first US crypto perps onshore.
That's a feat because the offshore market is $90 trillion. It's huge. I've had seasoned traders and finance execs on the show say that they thought perps would eat the world. This is also Kalshi's first non-prediction market trading product. Tell us why Kalshi decided to launch crypto perps for its first big foray into crypto.

**John Wang** (3:07)
Yeah. Well, Kalshi's crypto prediction markets are actually also quite popular right now. We've grown, I think, around 15x since the start of the year. And it's the second largest category on the platform. Currently, around like $2-3 billion a month in volume. So it's quite a lot. But aside from that, we did, yes, enter petrels into the US. And we are starting with crypto. The reason why we chose this asset clause is kind of similar to why we started with prediction markets. They both originate from academic papers from decades ago by Nobel Prize-winning and very consequential economists. And Kalshi is essentially taking this financial instrument that people have a very strong demand for and bringing it to the US in a regulated way with the liquidity and the infrastructure to support it. And obviously, it's huge outside of the US given that, as you said, $90 trillion have my number.
But we see it as like a frontier of finance. It's essentially a new derivative that gives you the capital efficiency and sort of like leverage that options or futures might, but without many and many of the complexities involved.
And yeah, we hope to make this kind of our next chapter as Kalshi, bringing Kalshi towards our ultimate vision of creating the next generation extreme.

**Laura Shin** (4:59)
And so as we mentioned already, this is a huge offshore market, it's something that's basically new here in the US. So for Americans who are listening who haven't really ventured into perp trading offshore already, explain what a perp even is and why or how a trader would use perps in their trading.

**John Wang** (5:20)
Yeah, so perps stand for perpetual futures. And so it's essentially the most, in my opinion, like the most pure trading instrument, where you can trade on the price of an asset going up or down, so you can profit from both rising and falling markets. And then you can also hold that position for as long as you want. So unlike options or futures or like, you know, the traditional types of Didriids that we're used to, they kind of, those kind of expire at a certain date, which means you have to roll over your contract, start again, you know, pay the costs of entering the position again with, with the federal futures, it's actually sort of a much more seamless and simple trading experience.