Going from DeFi to TradFi
Just got a job offer from a lesser known crypto market maker that is paying close to 400k all in for my first job out of school. The actual job responsibilities seem almost identical to that of a traditional shop as you are working closely with data and need technical know how and also there are intricate links between crypto price action and macro events so monitoring news is important (although the channels of these news need not always be the most traditional media).
Here's my dilemma - the job to me seems very attractive. The people are cool, the money is great. However, I'd like to know whether I have some optionality. I don't have particular views on crypto (and neither does the head of the desk tbh, he told me he just finds a lot of easier alpha in making markets in this industry compared to his older gig, although a lot of the lower hanging fruit is starting to go away). I just want to know if there's going to be opportunities down the line where I can pivot to more traditional asset classes (let's say less than 5 years down the line, because I suppose even in tradFi everyone has to eventually specialize and people get pigeonholed) if I choose to go that way. I know for certain I have the technical expertise to do those jobs if I can do this job, but just wanna know if my resume might get auto dinged just for coming from defi.
Ah, swinging from the DeFi vines to the TradFi towers, are we? Quite the jungle out there in the financial markets! Let's break down your conundrum:
Job Offer from Crypto Market Maker: A hefty $400k package straight out of school is nothing to sneeze at. It's bananas! The role's similarity to traditional finance (TradFi) roles in terms of data analysis and the need to stay abreast of macro events is a plus. It means you're developing transferable skills.
Optionality and Pivoting: You're wise to consider your future moves. In the finance jungle, it's all about adaptability. While DeFi is the new kid on the block, it's gaining legitimacy fast. Your technical expertise is a strong asset, and the experience in a fast-paced, innovative market could be seen as a plus by traditional firms, especially as they increasingly look to integrate blockchain and crypto into their operations.
Resume Concerns: There's always a risk of being typecast, but it's not a foregone conclusion. If you're worried about being pigeonholed, make sure to highlight the transferable skills and experiences on your resume. Emphasize your technical know-how, analytical skills, and ability to adapt to market changes. These are golden nuggets that shine in any financial role.
In less than five years, the landscape could change significantly. Traditional finance firms are already starting to dip their toes into crypto waters. By then, your DeFi experience might be more of an asset than you think. Plus, if you're really good at swinging through the market trees, you'll find ways to demonstrate your value, regardless of the asset class.
Remember, it's not just about where you're coming from; it's about what you bring to the table. Keep sharpening those skills, stay agile, and you could very well swing into any financial role you set your sights on. Keep an eye on the WSO threads for more insights and tips on navigating these career transitions!
Sources: Is Traditional Finance Dead?, HYPSM ex-Quant Fund Intern Senior career advice and opinion on the future of finance and the world, Intern Burnout, Considering Full-Time, Would you ding a candidate if they refer to themselves in third person pronouns in their LinkedIn bio, Edgy Resume? Yes or No?
Working at a crypto focused shop =\= working in DeFi!
Really. But is there stigma attached to it from tradfi?
There definitely is stigma attached to the crypto industry. I know this as objective truth.
Subjectively speaking, I know plenty of people in the industry that think crypto is a joke and only some hack would work in the industry. If I were screening resumes, I'd pick someone with equities experience over someone who's moving from crypto into equities. I do think there is more support in building out crypto products from a management level. That being said even they probably wouldn't hire someone from crypto into traditional finance positions. This just comes down to a lack of transferrable industry knowledge. I do have a heavy equity buy-side bias. I am not sure if these things hold true for market makers.
All that being said, for $400k.... I'd do it.
I think the negative impressions in TradFi of a candidate coming from crypto are a mix of:
(1) different assets classes are inherently somewhat different and crypto is perhaps especially idiosyncratic so you won't have directly relevant expertise especially if the firm only trades crypto. This is going to be a particular issue if you are doing well at the firm and then become rather expensive quickly although then being stuck in crypto is not so bad.
(2) a sense that crypto is less competitive and there is a lot of opportunity in tricks in understanding exchanges/crypto assets as well as legally questionable behavior that is currently less regulated in crypto markets
(3) significant regulatory risk as many in TradFi see most big crypto exchanges as shady which in the case of Binance is probably well deserved. This is less of a concern if you aren't American or US based and can still freely trade on Binance
I guess one advantage you would presumably have is if switching to TradiFi is not being subject to a non-compete while many/most candidates from other TradFi firms would be subject to one.
Another consideration not explicitly stated in the OP's post is what the alternative options are. I would probably be inclined to take an offer at a large well respected trading firm that pays somewhat less over this crypto market maker offer but my impression is at most small trading firms a large fraction of college hires don't last long in the industry anyways so the additional risk of being in crypto is less of a concern if the alternative is a smaller shop.
Can you say which market maker? Or share a list of
I can't, it's low key enough that if I give you a list you'll immediately know lol. Not trying to dox myself.
Crypto quants are known to not be the brightest...
But, you're still a quant, still miles better than fundamental apes.
Where's this perception from? At least I can say from the firm I'm talking about everyone senior is from elite traditional shops. The juniors like myself are more of a mix - most are from target schools and some just have crazy passion for the asset.
$400K in cash comp?
Sort of, the guaranteed components (base+sign) are in the 200-250k range, the target bonus is a % of base but they give you a range I just took the middle of the range to land at a figure of 400k, although of course in a bad year you could theoretically make no bonus (probably fired in this case lol).
I’d take the offer as you’re in your early 20’s and can afford to take on that level of risk. Worst case scenario you can pivot using an MBA back to a more traditional path in 4-5 years.
Curious how you landed the seat as I’ve thought of making the move over to the crypto side of the business.
MBA out of the question for me, I've been too deep in the weeds with STEM to do one and not constantly feel like I just torched money.
I got in by some luck and a lot of work. I just cold emailed/linkedin messaged a bunch of people and most said not hiring rn but one of them was already working with some staffing agency to fill a role and I interviewed and got it. Very lucky that they were looking for early career cause most of then want some experience.
Fair enough and depending on your background you may be able to go for free so I wouldn’t entirely rule it out. I think its value has certainly declined and will continue to do so but it’s not a bad last resort if things ever hit the fan. It’s more of a if you can’t beat them join them play as these schools and programs have strong pipelines into firms. Something like the Value Investors Program at Columbia for example is a widely respected track that would get you a job at an equities fund in all likelihood.
Are there any resources you’d recommend for learning more about crypto?
I’ve read some of the basic books but have found it difficult to determine the strength of a lot of the qualitative information you see out there.
Something like Chainlink for example in principle seems like a promising project and idea but I still have no idea how to it compares to peers in its underlying technology. Mostly you just hear a lot of noise about partnerships and talking points about its potential making it hard to determine what’s driving price action from an outsiders perspective.
Part of this could be that I’m on the credit side of the business and am therefore a lot less focused on qualitative factors.
Are you trading?
It's fully automated. I'll be supervising live trading + helping backtest and research new strategies.
sounds very applicable to other quant trading roles
exactly what you'd think and what others said. and its all true. it is less competitive and most people in crypto are hacks / scammers / less capable than people in tradfi (though not all). i mean to be honest, it's obviously an amazing market since crime has a big TAM and is an underserved market etc with crypto being basically the only major innovation to help out criminals with tech. like i'm pretty sure money laundering is probably one of the biggest tams of any industry. this matters because crypto will continue to grow which is rare in finance -- when an asset class grows it helps you out in your career because it gives a structural reason why you can continue to grow in your career. people who did HFs in the 1990s had this benefit, but aside from quant prop and multimanager there's not a similar growth story in the industry except crypto.
i don't think its impossible to pivot later though - at the end of the day in the quant world a lot of the ways you interact with data do generalize across asset classes and if this is far better than other opportunities i wouldn't say no. not that you need to - i don't see what's that bad about staying in crypto forever if you're ok with either deluding yourself that the end market is criminals or are ok with the idea conceptually that this is the primarily economic use of the asset aside from speculation. the pay in the long run is what matters, but in the short run pay is often correlated with the quality of experience you'll get and its in this light that i think its probably a good opportunity.
Not even thinking along the lines of uses of crypto (which I can definitely see as an enabler of criminality), just purely seeing it as a tradeable asset that i can learn the ropes of quant with. I'm just happy to get into the industry after a pretty underwhelming recruiting cycle this year where a lot of firms that I would've wanted to recruit with didn't even have a new grad opening as they always do.
I am interested in this space as well but I am not familiar with what relative work experience or internships that these firms look for. Can I PM you?
“Crime has a big TAM”
👏🏼👏🏼👏🏼
I think using the term TradFi itself has some stigma attached to it. But more seriously, I think if you are reasonably sure your all-in comp is in that ballpark it would be hard to reject, especially since you are young enough to switch eventually if you try. If you have a good chance at getting a similar offer from TradFi then that would make the choice a little harder.
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