The Backpack exchange has reportedly reached over $600 million in daily trading volume within the first few days of its “preseason” launch. However, some have concerns that the majority of these trades appear to come from a single user.
The launch of the Backpack cryptocurrency exchange “dedicated to the ideals and principles the industry stands for” was announced in October 2023. It was created by two former colleagues of the disgraced Sam Bankman-Fried: FTX’s former general counsel, Can Sun, and former Alameda Research software developer, Armani Ferrante. The Solana-based exchange is a part of an ecosystem that also includes Web3 digital wallet Backpack, the Anchor framework and Mad Lads community.
The exchange is currently in beta and available only with invite codes. Before it had even received its "preseason" launch, the exchange reportedly saw an impressive 6,000 unique deposit transactions within 24 hours.
Since the "preseason" launch earlier this week, Backpack has skyrocketed, reaching $300 million in trading volume over the first 24 hours, according to a post from Ferrante on X. According to a more recent post from yesterday, the 24-hour volume has now doubled, reaching over $600 million, with the SOL/USDC market reportedly becoming the largest SOL pair in the world. Ferrante also claims impressive trading metrics, and the rollout of fiat wire transfers to a select VIP group.
The “preseason” refers to the launch and testing of Backpack Rank, an internal reward system, which Ferrante compared to "becoming a Gladiator in World of Warcraft." The system will reward users for their activity, aiming to enhance engagement and loyalty, and create a dynamic and competitive trading environment. Currently, user rankings depend only on maker and taker trading volume outside of the USDT/USDC pair. Later "seasons"are expected to depend on more factors, including deposits and withdrawals, referrals, presence and events.
It should be noted that all of these 'updates' come directly from the posts of Ferrante himself, and that some users have concerns that the majority of trades are conducted by just one user, which could suggest that the figures are artificially inflated. Ferrante (yes, him again) explained this by saying that the exchange doesn't have many market makers at the moment and doesn’t run its own internal market maker like other exchanges. The exchange has also stated that market makers who take part in the Market Maker Program will not be qualified for future ranking events.
The centralized exchange is regulated by the Dubai Virtual Assets Regulatory Authority, securing a license even before its launch while other well-known crypto companies are still awaiting VARA approval. According to the team, the exchange is audited by OtterSec and other independent researchers.
Allegedly thanks to Backpack’s success, Mad Lads NFT sales volume rose by 576% between February 13 and 16, becoming the second-largest NFT collection by daily volume after Ethereum Pandora. Solana sales volume has also risen, making it the second-largest blockchain by daily NFT sales volume after Ethereum.
The Backpack Exchange launch has seen extreme support from the community, according to social media. Apparently, the ranking system and gamified approach have attracted many users and proven extremely successful.
We look forward to Observing future "seasons" and the upcoming full launch of the exchange, which could have a positive impact on the whole Solana ecosystem and community. Ferrante promised to create a completely new type of crypto-native institution, while avoiding the typical industry pitfalls, so it will be interesting to see how the project develops.