PAX Markets

What do they actually do

PAX Markets is building a cryptocurrency exchange whose matching and order-placement logic runs on custom silicon. Its core feature is an in-exchange, event-driven “λ API” that lets users upload small programs (a predicate plus an underlying order) that are evaluated inside the exchange so orders can trigger with minimal network hops (site, λ API).

PAX says standard trading on the venue will have zero fees with cash‑back rebates, while the company charges for premium access to the ultra‑low‑latency λ API (“sell speed, not trades”) (rebates).

Today, PAX is in an early‑access/waitlist phase rather than a broadly live public exchange; its site and YC profile describe an Early Access program and active hiring for foundational engineering roles (site, YC profile).

Who are their target customer(s)

• High‑frequency/market‑making firms: They lose edge when execution is even slightly slower than rivals and pay for colocation, custom hardware, and engineering to shave microseconds; they want deterministic, venue‑side triggers to cut round‑trip latency (λ API).
• Quantitative/prop trading teams running automated strategies: Decision logic off‑exchange reacts after venue events, causing missed fills or adverse selection; they want event‑driven orders evaluated inside the exchange to respond immediately (λ API).
• Fee‑sensitive retail and institutions: Per‑trade fees and opaque rebates reduce net returns and complicate venue choice; they want low‑cost execution with predictable, simple economics (rebates).
• Small market makers and developer trading teams: They lack budget and ops to build ultra‑low‑latency stacks; they need a way to run fast, event‑driven strategies without heavy capex or colo contracts (site, λ API).
• Brokers and execution aggregators: They must route across venues with consistent latency and economics; they want programmatic access, predictable pricing, and features that improve execution quality for clients (λ API, rebates).

How would they acquire their first 10, 50, and 100 customers

• First 10: Run invite‑only pilots with top HFT/MM and prop shops; pair a senior PAX engineer to port 1–2 live strategies to λ, run side‑by‑side latency/fill tests under NDA, and collect metrics and quotes (λ API, YC profile).
• First 50: Open a paid early‑access cohort for smaller MMs/boutique props and developer teams; include integration credits, prebuilt λ templates, two hackathons/trading competitions, and referral credits to document repeatable onboarding (λ API, rebates).
• First 100: Launch self‑serve with SDKs, example strategies, turnkey MM templates, public docs and KYC; offer tiered paid λ access while keeping zero‑fee trading, and use pilot metrics and testimonials to close broker/aggregator integrations (rebates, λ API).

What is the rough total addressable market

Top-down context:

Centralized crypto exchange apps generated about $46B in revenue in 2024, and trading volumes were in the tens of trillions (e.g., ~$18.4T) (Business of Apps, Finance Magnates).

Bottom-up calculation:

Because PAX monetizes paid λ access, a practical near‑term TAM is what latency‑sensitive firms would pay for speed. For example, converting 1% of the 2024 exchange revenue pool into λ subscriptions is ~$460M/year, or displacing ~5% of HFT/low‑latency infrastructure spend (~$9B market) yields ~$450M/year—both pointing to low‑hundreds of millions near‑term (Business of Apps, 360iResearch).

Assumptions:

• PAX primarily monetizes via paid λ access while keeping standard trades zero‑fee with rebates (rebates).
• Initial adoption is concentrated in speed‑sensitive firms (HFT/MM/prop) rather than mass retail (λ API).
• The exchange‑revenue capture view and infrastructure‑displacement view overlap and should not be summed directly.

Who are some of their notable competitors

• Binance: Global exchange competing for the same latency‑sensitive and fee‑sensitive flow with colocation/low‑latency connectivity, algo/conditional orders, and maker incentives; it competes on liquidity and scale rather than on‑chip execution (colocation explainer, algo trading).
• Coinbase (Exchange / Prime / International): Institutional‑grade venue with low‑latency market‑data/trading APIs and fee tiers for professional traders; a direct option for institutions wanting predictable programs without a new exchange architecture (Exchange API docs, Prime/International).
• Kraken: Major venue offering colocation/low‑latency services and maker‑rebate programs, targeting institutions and active retail; competes via traditional colo and incentives rather than moving logic onto silicon (colocation announcement, fee schedule).
• Hummingbot: Open‑source framework for market‑making and execution bots across many exchanges; gives smaller teams a low‑cost way to automate strategies instead of buying premium on‑venue latency products.
• Openware / OpenDAX (white‑label): Vendors that sell ready‑made matching engines and exchange stacks for firms wanting their own venues or bespoke low‑latency setups—an alternative to using a shared on‑chip venue (white‑label explainer).