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How crypto exchange Backpack climbed its path to success after the death of its main investor FTX | TechCrunch

The founders of Backpack, who build a crypto exchange and wallethave experienced strong growth since their launch in 2022. But the road has not been easy.

Backpack’s co-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 operational capital on FTX. We spent all this time building this protocol and it was like a knockout on the field and (we) needed to be resurrected back to life,” said Armani Ferrante, co-founder of Backpack and the NFT collection Mad Lads. TechCrunch.

And they not only lost their investment money and their partner, but FTX ushered in a crypto bear market that has only recently started to rebound.

Backpack has survived largely thanks to its supporters. “It’s a combination of product, community, social goodwill and timing that has attracted an incredible group of people,” Ferrante said. “It has since taken on a life of its own.”

On Monday, its “preseason phase 1,” aka the beta phase of the exchange, ended after a month and a few days. During that period, total trading volume was more than $27.5 billion and executed 259 million orders at a rate of about 5,000 per minute, according to company data. messages on. 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 CoinGecko data.

“We caught lightning in a bottle in a weird way, where people just started talking about Backpack as this promising new exchange and seeing the promise of a next generation exchange that can learn many lessons and mistakes that were made up of previous exchanges,” Ferrante said.

There are many lessons to be learned from FTX, Ferrante said. One of the fundamental goals of Backpack’s design was to solve the problems exposed by FTX, he added.

Unlike FTX, Backpack designed its exchange’s system to ensure that balances are controlled by independent entities, or nodes, that can validate each other collectively so that every order, cancellation, deposit, withdrawal, etc. is verified. This is done in the hopes that there is no single point of failure and that the operations of the Backpack crypto exchange can be distributed across multiple entities. “The industry has been forced to mature, for the better,” Ferrante said.

“The collapse of FTX was horrible, but 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 tough problems that were going unresolved,” Ferrante said. “We are taking the product in our own direction,” he added, and this goes beyond an exchange and extends to other products as well.

Backpack is also developing its crypto wallet and platform for xNFT; which are a new token standard on the Solana blockchain that are similar to NFTs, but are also a platform itself for web3 applications. This goes back to the origin of the name Backpack, inspired by MMO games like World of Warcraft or Runescape that provide users with backpacks to store their inventory. “In a (normal) wallet you have cards, cash and coins, but a backpack can hold everything, not just money, so we see it as a much more dynamic version of a portfolio,” Ferrante said.

Mad Lads, one of the largest Solana NFT collections created by Backpack, is also an xNFT, with a trading floor price of around 172 SOL, or $34,400, at the time of publication. “For us, we are fortunate that our community is complementary to our business,” Ferrante said. “We wanted to create a product for them and improve their lives in crypto.”

But Mad Lads isn’t the only xNFT, Ferrante said. For example, the Solana Monkey Business NFT collection has an xNFT with a newsletter called Banana Split and it is regularly updated. 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 valuation of $120 million in a Series A round led by Placeholder VC. Backpack has recently expanded to the UK and is present in 11 US states, Dubai and throughout the Asia-Pacific region. But this is just the beginning, Ferrante said. The team’s new capital will be used for global expansion, as Backpack aims to reach 95% of global GDP by the end of 2024 “to serve its customers in a compliant manner,” Ferrante said.

Moving forward, it’s all about execution for Backpack on many different fronts. But product distribution is a priority for the exchange, as it hopes to penetrate every country in the world.

“It’s one of those crazy things where it’s a winner-takes-all deal,” 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.”

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