Crypto Exchange Backpack’s Rise to Success After FTX Collapse

Backpack: Rising from the Ashes of FTX’s Collapse

A Promising Start

In 2022, Backpack, a crypto exchange and wallet, launched with high hopes. The company secured a $20 million strategic investment led by FTX in September. However, their journey took an unexpected turn when FTX collapsed in November, leaving Backpack in a precarious position.

“We lost 80% of the operating capital on FTX. We spent all this time building this protocol and it was like an on-the-ground knock-out and [we] needed to be resuscitated back to life,” Armani Ferrante, co-founder of Backpack and the NFT collection Mad Lads, told The Zero Byte.

Community Support and Impressive Growth

Despite the setbacks, Backpack persevered, largely thanks to the support of their community. The exchange recently concluded its beta phase, dubbed “Pre Season Phase 1,” which lasted for about a month. During this time, Backpack achieved remarkable milestones, including:

• Trading over $27.5 billion in total volume
• Filling 259 million orders at a rate of 5,000 per minute
• Adding 252,000 KYC’d users, bringing the total to 560,000

According to CoinGecko data, Backpack’s trading volume peaked at $3.66 billion on Sunday and currently maintains a 24-hour volume of around $2.8 billion.

Learning from FTX’s Mistakes

Backpack’s founders recognize the importance of learning from the mistakes exposed by FTX’s collapse. They designed their exchange’s system to ensure that balances are controlled by independent entities, or nodes, that can collectively validate each other. This approach aims to eliminate single points of failure and distribute the operations of the exchange across multiple entities.

“The collapse of FTX was horrible, but looking glass half full, it’s like a phoenix rising from the ashes and we have to step up our game to solve the hard problems that weren’t being solved,” Ferrante said.

Expanding Beyond an Exchange

In addition to the exchange, Backpack is developing a crypto wallet and platform for xNFTs, a new token standard on the Solana blockchain similar to NFTs but with the added functionality of serving as a platform for web3 applications. The name “Backpack” was inspired by MMO games like World of Warcraft or Runescape, where users have backpacks to hold various items, not just money.

Backpack’s own NFT collection, Mad Lads, is an xNFT with a current trading floor price of about 172 SOL, or $34,400. The company sees its community as complementary to its business and aims to build products that improve their crypto experience.

Securing New Investments and Global Expansion

Despite losing FTX as an investor, Backpack successfully raised $17 million at a $120 million valuation in a Series A round led by Placeholder VC at the end of February. The company has expanded into the United Kingdom and has a presence in 11 US states, Dubai, and the Asia-Pacific region.

Backpack plans to use the fresh capital for global expansion, with the goal of reaching 95% of the world’s GDP by the end of 2024. The team is focused on execution and product distribution, aiming to enter every country around the world.

“It’s one of those crazy things where it’s a winner take all 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 out of everything.”