How Floating Point Group Makes Crypto Trading More Efficient
Floating Point Group is an NYC-based cryptocurrency firm that uses smart-order-routing (SOR) technology to make crypto trading happen as efficiently as possible. The company was founded by John Peurifoy, Kevin March, and Van Phu last year, and were most recently a part of MIT’s delta v summer accelerator.
I recently spoke to March about the company, as well as the current (and future) state of cryptocurrency.
How did Floating Point Group come to be?
FPG started just like every other good company has: as three students crammed into a minuscule room filled with monitors building a dorm room hedge fund. We built out all kinds of sophisticated infrastructure and came up with some great ways to automate our workflow in an attempt to go toe-to-toe with the biggest players in cryptocurrency at the time.
It had some success—enough to convince us that crypto is real and furthermore that we can succeed in the space. When we were accepted in May into MIT’s summer accelerator, we assumed they wouldn’t be too excited about us building a hedge fund (it turns out, they want to solve ‘real problems’ or something like that). We spent an incredible amount of time debating ways that we could adopt what we had already built into a new business model. We considered building an exchange of exchanges for a while, but we weren’t convinced that that was solving a problem that mattered.
We came to a pretty obvious insight at some point that seems like common sense but can’t be understated: the evolution of the cryptocurrency markets is going to be modeled after previous asset classes, but with a blisteringly quick growth curve. We decided to take a fundamental approach and speak to as many financial institutions as possible to understand how the FX market developed and talk to the people who rode that wave. One thing that really struck us is that approximately 75% of trades are now conducted algorithmically. Even if someone is logging on to their mobile app that lets them buy and sell stocks, it’s not nearly as simple as it looks at face value—there exists mind-blowingly sophisticated trade architecture behind clicking that button that doesn’t exist in cryptocurrency. That backend is required for the financial markets to hum along as efficiently as they do. This is what helped us land on what we are producing as our cornerstone product: smart-order-routing for cryptocurrency.
Tell me about what your firm does. What is smart-order-routing (SOR)?
To put it simply, we’re in the business of making cryptocurrency trades happen as efficient as possible. “Efficient” in this case can be interpreted as finding the best price, executing as quickly as possible, and preventing market impact from sizable trades. A great SOR does precisely that. The biggest pain point that we’re solving for our customers is helping them avoid price slippage, which is when a person places a trade that’s too large for the market to accommodate at the current spot price, so the order begins to be filled by worse and worse prices. We estimate that this year alone, cryptocurrency traders have lost over $10 billion to slippage. We offer an API for traders, miners, etc. to plug into to place their trades through our SOR algorithms. We’ll soon be launching an interface through our website to let less tech-savvy individuals use the technology as well.
How has the company evolved over time?
We’ve been dedicatedly building the tech for almost a year now but only started the company about 4 months ago, so the rate of change is still at light speed. We’ve grown to have a much deeper understanding of the pain points that we can solve for our customers, such as miners who often have to speak to OTC desks on a weekly basis to liquidate their holdings. A lot of it has been learning how to turn down opportunities to stay focused on our path and keep fighting toward what we’re passionate about. There’s nothing we would rather do than produce the most technologically advanced SOR in the industry. As we’ve gained more presence around the New England area and NYC, it’s been a practice of discipline that we’re getting increasingly better at to make sure we don’t get pulled away from building our vision of the future of cryptocurrency and tokenized assets.
What have the differences been between working in NYC and working in Boston tech?
We certainly acknowledge that NYC and Boston are both titans in tech entrepreneurship, but the differences between them are reminiscent of comparing Amazon to Google (full disclosure: we’ve never worked at either so don’t read too much into the metaphor). NYC is overflowing with energy, ideas, and hustlers attempting to bring their creations into the world. The city strikes us as a utility-first kind of place full of dreamers who are willing to do what it takes to be successful. We don’t encounter many people who are wasting any time—whether it’s at a networking event or simply the pace that they walk toward the subway toward their next meeting. The crypto space particularly is bold, vibrant, and seemingly without end. It’s phenomenal how many people we have met.
Boston is a separate entity altogether. The academic influence is palpable in most engagements. Startups are often comprised of researchers who structure their entrepreneurial journey similarly to their research: with a hypothesis-driven methodology. We’ve often felt out of place in NYC’s tech scene for that reason. We’ve pitched our current model and how it’s validated and how our hypothesis has evolved, but it’s often the long-term vision that we’ve found the NYC community cares most about.
How has the crypto space changed since you started the company?
Just since May, there have been ongoing signs of maturity throughout crypto. Here are some stats that seem to be increasing on average for entrepreneurs entering the space: age, amount of previous founding experience, previous successful exits, and years of schooling. VC funding has been prolific. Scam artists are being systematically ousted from the community. Better products are being released that address major pain points. Financial institutions are increasingly showing an open-mind and the foresight to experiment with crypto and blockchain. Simply from the market side, we’re seeing the market correcting (have you seen ETH recently?) and volatility decreasing. It’s an invigorating space to get to play in each day.
Where does the crypto space go from here?
It follows that path of maturation that we mentioned. If you want to know what will happen with the market, look at the timeline of FX markets evolving and then double its speed. Market cap and volume will grow as more regulatory and custodial issues are resolved, letting more institutions feel comfortable inching into the space. One of the developments we’re most excited about is the advent of tokenized assets, and how they’ll change the market as well. We harbor a belief—particularly in regards to the global real-estate markets—that asset tokenization will wrought a revolutionary shift in long-term investment practices for everyday people. We can’t wait to dive in as it happens.
Where does Floating Point Group go from here?
To the moon, obviously! On a serious note, we’ll be closing a seed round in the next two months so that our tech team can stop subsisting entirely off of Soylent and Red Bull. In the SOR space, we have an unfair advantage on the technical side, given our access to some of the world’s best engineers, AI researchers, and an advisory board made up of SOR experts who have defined the best practices for the last decade. We’ll be pressing that advantage hard in the near future to make sure that by this time next year, it’ll be costly not to use our tech. You’ll be able to find Kevin and our expanding growth team hustling at crypto, blockchain, and FinTech conferences within the U.S. and in places such as Saudi Arabia and Hong Kong. Come find us while we’re there! We’ve got stickers.