The founders of Backpack, who are building a cryptocurrency exchange and wallet, they have seen strong growth since launching in 2022. But the road was not easy.
FTX co-led Backpack’s $20 million strategic investment round in September 2022. Less than two months later, in November 2022, FTX collapsed.
“We lost 80% of the operating capital at FTX. We spent all this time building this protocol and it was like a knockout on the ground and [we] It needed to be resurrected to life,” Armani Ferrante, co-founder of Backpack and the Mad Lads NFT collection, told TechCrunch.
Not only did they lose their investment money and an important partner, but the FTX collapse marked the beginning of a cryptocurrency bear market that has recently begun to recover.
Backpack managed to get ahead largely thanks to his followers. “It’s a combination of product, community, social goodwill and opportunity that attracted an incredible group of people,” Ferrante said. “Since then it has taken on a life of its own.”
On Monday, their “Preseason Phase 1,” also known as the exchange’s beta phase, ended after a month and a few days. During that period, it traded more than $27.5 billion in total volume and completed 259 million orders at about 5,000 per minute, according to the company’s posts on X. It also added 252,000 KYC 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 volume of around $2.8 billion, according to data from CoinGecko.
Image credits: CoinGecko (Opens in a new window)
“We’ve caught lightning in a bottle in a strange way, where people started talking about Backpack as this promising new exchange and seeing the promises of a next-generation exchange that can learn from many of the lessons and mistakes. that were made from previous exchanges,” Ferrante said.
There are many lessons to be learned from FTX, Ferrante said. One of the key design goals of Backpack was to solve the problems raised by FTX, he added.
Unlike FTX, Backpack designed its exchange’s system to ensure that balances are controlled by independent entities or nodes, which can be collectively validated against each other so that all orders, cancellations, deposits, withdrawals, etc. are verified. This is done in the hope that there is no single point of failure and that the operations of the Backpack crypto exchange can be divided into multiple entities. “The industry has been forced to mature, for the better,” Ferrante said.
“The collapse of FTX was horrible, but looking at the glass half full is like a phoenix rising from the ashes and we have to step up our game to solve the difficult problems that were not being solved,” Ferrante said. “We’re taking the product in our own direction,” he added, and this goes beyond a trade-in to other products as well.
Backpack is also developing its crypto wallet and platform for xNFTs, which are a new token standard on the Solana blockchain that is similar to NFTs but is also a platform for web3 applications. This points 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 store inventory. “In a [normal] In a wallet you have cards, some cash and coins, but a backpack can hold everything, not just money, so we see this as a much more dynamic version of a wallet,” Ferrante said.
Mad Lads, one of the largest Solana NFT collections in existence created by Backpack, is also an xNFT, trading at approximately 172 SOL, or $34,400, at the time of publication. “For us, we are fortunate because our community complements our business,” Ferrante said. “We wanted to create a product for them and improve their life in cryptocurrencies.”
But Mad Lads isn’t the only xNFT out there, Ferrante said. For example, NFT collection Solana Monkey Business has an xNFT with a newsletter called Banana Split and it is updated regularly, so when someone has the NFT on Backpack, they can access the newsletter directly in their wallet, he noted.
As for replacing FTX as an investor, that also went well. In late February, Backpack raised $17 million at a $120 million valuation in a Series A round led by Placeholder VC. Backpack recently expanded to the UK and has a presence in 11 US states, Dubai and the entire Asia-Pacific region. But this is just the beginning, Ferrante said. The team’s new capital will be used for global expansion, as Backpack wants to reach 95% of global GDP by the end of 2024 “to serve customers in a compatible manner.”
Looking ahead, Backpack will focus on execution on many different fronts. But the distribution of products is a priority for the exchange, since it hopes to reach all countries in the world.
“It’s one of those crazy winner-takes-all things in the market,” Ferrante said. “We want to seize the moment and, given everything we talked about, that opportunity exists this year, so we’re making the most of everything.”
