Blockchain Networking Start-up bloXroute Acquired by FalconX

BloXroute, a blockchain solution start-up with Northwestern roots, reached a significant milestone on July 15 with its acquisition by FalconX, a digital asset prime brokerage. BloXroute was co-founded by Northwestern Engineering’s Aleksandar Kuzmanovic, Uri Klarman (PhD ’19, MS ’17), and business partner Eyal Markovich in 2017.

In a news release, FalconX stated that combining bloXroute's networking infrastructure with FalconX's institutional trading platform and global market infrastructure will accelerate the development of next-generation on-chain capital markets. Through these blockchain-based systems, financial assets like bonds, equity, and loans, are issued traded, and settled via smart contracts without traditional intermediaries like banks or clearinghouses.

“We have a lot of very interesting synergy,” said Kuzmanovic, professor of computer science at the McCormick School of Engineering. “Our technology can be used to further improve FalconX’s on-chain markets.”

BloXroute’s core Blockchain Distribution Network (BDN) technology—developed by Klarman and Kuzmanovic—enables traders to receive blockchain data and submit transactions with greater speed, reliability, and privacy across major blockchain ecosystems.

Since its founding, bloXroute has grown into a leader in blockchain networking infrastructure.

“It's been a roller-coaster,” Kuzmanovic said.

Solving blockchain scalability as a networking problem

Shortly after joining the PhD program in computer science in 2014, Klarman launched a project focused on computer networking and Wi-Fi security. He submitted it to a key conference twice and was rejected both times.

That’s when Kuzmanovic, Klarman’s adviser and head of the Northwestern Networks Group, suggested pivoting to researching the scalability problem of blockchain, the digital ledgers that record cryptocurrency transactions. From a networking perspective, the inherently decentralized and distributed structure of blockchain causes a traffic bottleneck of global financial transaction data.

“When we were starting out, the transactions per second in the peer-to-peer blockchain network model were fairly small,” said Kuzmanovic, professor of computer science at the McCormick School of Engineering. “Our initial goal was to try to boost this and increase throughput to make blockchains more effective.”

Using advanced networking techniques such as internal caching, encryption, cut-through routing, optimized topology, and dynamic route selection, the BDN serves as a data delivery mechanism, scaling blockchains without compromising security. Essentially the blockchain equivalent of a content delivery network (CDN), the BDN is a global network of fast, well-connected relay nodes that help transmit blockchain data to everyone as quickly as possible.

With the launch of decentralized financial services and decentralized exchange (DEX) trading built on blockchain networks without traditional intermediaries like banks, brokerages, or exchanges, bloXroute gained traction.

In 2017, the bloXroute team secured a $10 million round of seed funding, backed by venture capital firms such as Flybridge and by Naval Ravikant, the CEO and co-founder of AngelList. The successful first product test with blockchain network Ethereum that followed set the stage for more collaborations between bloXroute and top blockchains such as Bitcoin Cash, culminating in the official launch of bloXroute’s BDN Version 1 in December 2019. Earlier that same year, Klarman defended his doctoral thesis on the development of the BDN, “Unchaining the Blockchain Network Layer.”

In 2022, bloXroute completed a $70 million Series B funding round led by SoftBank Vision Fund 2 to further company expansion plans.

Because of the BDN’s faster and more predictable delivery for latency-sensitive trading and execution systems, bloXroute grew to become the de facto network layer for professional traders, searchers, and validators operating on networks including Solana, BNB Chain, Base, Ethereum, Hyperliquid, Robinhood, and Polygon.

From congestion in financial networks to AI congestion

While bloXroute solves the fundamental congestion problem in digital financial networks through the BDN, Kuzmanovic and his team are turning their attention to internet congestion caused by retrieval-augmented generation (RAG). Large language models use RAG to find answers to prompts on the internet.

In June, Cloudflare reported that 57.4 percent of requests to a set of websites it hosts are now AI-agent and bot-generated, versus 42.6 percent human — the first time bot traffic has overtaken human traffic.

“Tens or even hundreds of requests can come out of a single question on an LLM. And this is just the beginning,” Kuzmanovic said. “The internet wasn't designed for this type of stress, so there needs to be a smarter way to do this. And there’s a lot of activity in my lab along those lines.”

Editor’s note: Prof. Kuzmanovic has financial interests in and affiliations with bloXroute Labs, Inc. Northwestern University has financial interests (equities, royalties) in bloXroute Labs. Inc.