This paper presents Jellyfish Merkle Tree (JMT), a space-and-computation-efficient sparse Merkle tree optimized for Log-Structured Merge-tree (LSM-tree) based key-value storage, which is designed specially for the Diem Blockchain. JMT was inspired by Patricia Merkle Tree (PMT), a sparse Merkle tree structure that powers the widely known Ethereum network. JMT further makes quite a few optimizations in node key, node types and proof format to find the ideal balance between the complexity of data structure, storage, I/O overhead and computation efficiency, to cater to the needs of the Diem Blockchain. JMT has been implemented in Rust, but it is language-independent such that it could be implemented in other programming languages. Also, the JMT structure presented is of great flexibility in implementation details for fitting various practical use cases.