The founders of Backpack, who they build a crypto exchange and a wallethave seen strong growth since launching in 2022. But the road hasn’t been easy.
Backpack led by FTX $20 million strategic investment round in September 2022. Less than two months later, in November 2022, FTX collapsed.
“We lost 80% of working capital in FTX. We spent all this time creating this protocol and it was like a knockout on the ground and [we] it needed to be revitalized,” Armani Ferrante, co-founder of Backpack and the NFT Mad Lads collection, told TechCrunch.
Not only did they lose their investment money and a major partner, but the collapse of FTX led to a crypto bear market that has only recently started to recover.
Backpack has succeeded thanks to its supporters. “It’s a combination of product, community, social goodwill and timing that brought in an incredible group of people,” Ferrante said. “Since then it has taken on a life of its own.”
On Monday, “Pre Season Phase 1,” also known as the beta phase of the exchange, ended after a month and a few days. During that time frame, it traded more than $27.5 billion in total volume and filled 259 million orders at about 5,000 per minute, according to the firm’s figures publications in X. It also added 252,000 KYC’d users, bringing its total to 560,000 users.
The exchange’s trading volume peaked on Sunday at $3.66 billion and has a 24-hour trading volume of about $2.8 billion, according to CoinGecko data.
Image Credits: CoinGecko (opens in new window)
“We caught lightning in a bottle in a weird way where people are just starting to talk about Backpack as this new up and coming exchange and they see the promise of a next generation exchange that can learn from a lot of lessons and mistakes made by previous exchanges” , Ferrante said.
There are many lessons to be learned from FTX, Ferrante said. One of the fundamental design goals for the Backpack was to solve the problems exposed by FTX, he added
Unlike FTX, Backpack designed its exchange system to make sure that the rest is controlled by independent entities or nodes, which can collectively validate each other so that every order, cancellation, deposit, withdrawal, etc. is controlled. ok This is in the hope that there is no single point of failure and that the functions of the Backpack crypto exchange can be split into multiple entities. “The industry has been forced to mature, for the better,” Ferrante said.
“The FTX collapse was horrible, but it looks like the glass is half full, it’s like a phoenix rising from the ashes, and we need to step up our game to solve the hard problems that weren’t being solved,” Ferrante said. “We’re taking the product in our own direction,” he added, and it’s going beyond an exchange to other products as well.
Backpack also creates its own crypto wallet and platform xNFTs, which are a new token standard on the Solana blockchain that is similar to NFTs but also a platform for web3 applications. This points back to the origin of the name Backpack, which was inspired by MMO games like World of Warcraft or RuneScape that provide users with backpacks to hold inventory. “In a [normal] A wallet you have cards, some cash and coins, but a backpack can hold everything, not just money, so we see it as a much more dynamic version of a wallet,” Ferrante said.
Mad Lads, one of the largest collections of Solana NFTs created by Backpack, is also an xNFT, with a floor trading price of approximately 172 SOL, or $34,400, at the time of publication. “For us, we’re fortunate that our community is complementary to our business,” Ferrante said. “We wanted to build a product for them and make their crypto lives better.”
But Mad Lads isn’t the only xNFT out there, Ferrante said. For example, the Solana Monkey Business NFT collection has an xNFT with a newsletter called Banana Split, which is updated regularly so that when someone has the NFT in their Backpack, they can access the newsletter directly in their wallet, he noted.
As for replacing FTX as an investor, it went well, too. In late February, Backpack raised $17 million at a $120 million valuation in a Series A round led by Placeholder VC. Backpack has recently expanded into the UK and has a presence in 11 US states, Dubai and throughout the Asia Pacific region. But that’s just the beginning, Ferrante said. The group’s fresh capital will be used for global expansion, as Backpack aims to reach 95% of global GDP by the end of 2024 “to serve customers with compliance.”
Going forward, it’s all about execution for Backpack on many different fronts. But product distribution is the focus of the exchange, as it hopes to reach every country around the world.
“It’s one of those crazy things that wins the whole market,” Ferrante said. “We want to seize the moment and given everything we’ve talked about, this opportunity is there this year, so we’re making the most of everything.”
