“We are curious about the Defi landscape, and feel that participating in Pyth gives us the opportunity to learn what it’s like to be part of this new market,” said Catherine Clay, head of data and access solutions at Cboe, in a interview.
Market data is a lucrative business for exchange operators. Companies such as Cboe and Nasdaq Inc. traditionally charge fees for professional users to access their data to make trading decisions. Increasingly, crypto funds are also considering paying for data from exchanges and other traditional markets.
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Cboe, the first global major exchange operator to join Pyth, does not see the move cannibalizing its core business, Clay said.
“We see it as an expansion of our current customer base,” Clay said. “We don’t feel it’s disruptive. This is another avenue where there are probably traders and users who don’t necessarily participate in a traditional market.”
Initiated by Jump in 2021, Pyth is a decentralized network built to bring real-time market data to smart contracts for trading and lending. It counts trading heavyweights, such as Jane Street, DRW Holdings and Virtu Financial Inc., and crypto exchanges such as FTX, as its data contributors. The network has suffered from errors, most notably an erroneously reported Bitcoin price last year that caused some unintended liquidations.
The collaboration with Cboe “is a massive validation of what Pyth is trying to build,” said Pyth Data Association director Michael Cahill. Pyth currently offers data on cryptos, stocks and currencies, and is looking to add other asset classes over time, such as options.
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“In the long term, there will be two markets, centralized and decentralized, and there will continue to be an appetite for market data in both,” Cahill said.
Cboe was one of the first exchanges to list Bitcoin futures back in 2017, then left the market in 2019 and was replaced by CME Group Inc. It also sought and failed to win approval from the Securities and Exchange Commission to list a Bitcoin exchange-traded product in 2016.
The company returned to cryptocurrencies with the acquisition of Eris Digital Holdings LLC, which gave them access to a spot market, regulated futures exchange and clearing house. Today, this business has been renamed “Cboe Digital”, with the backing of financial firms including market makers DRW, Jane Street and Virtu Financial Inc.
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