How was Backpack's staking token-to-equity conversion established?

Original | Odaily (@OdailyChina)

Author | Ding Dang (@XiaMiPP)

On February 24th, Backpack CEO Armani Ferrante announced a staking-for-equity plan. The plan states that users who stake Backpack's native token for at least one year will have the opportunity to convert these tokens into actual company equity at a fixed ratio. The company has already reserved 20% of its equity for this program.

Despite its brevity, this announcement carries far more implications than a typical TGE narrative.

In the conventional TGE narrative, users are seen as traffic or community token holders. However, in this design, Backpack is attempting to elevate users from product users to legal owners of the company.

The question is: Can this truly work? Is this a genuine financial innovation, or a high-risk experiment dancing on the edge of regulation? Does it change the power structure, or is it merely a more sophisticated form of token management? To understand this, we must revisit Backpack's own historical trajectory.

Backpack: A Company Rising from the Ashes

Backpack is an integrated "wallet + exchange" platform centered on the Solana ecosystem, founded by Armani Ferrante, a former member of FTX and Alameda Research. It was established after the collapse of FTX, emphasizing compliance and user custody.

However, unlike the "**trading first, ecosystem later**" development path of centralized exchanges like Binance, Backpack's path is reversed. It started with a wallet and NFTs, gradually accumulating users, community, and technical foundations before finally launching an exchange.

Looking back at Backpack's history. In 2022, the collapse of FTX not only tore apart the credit structure of the entire crypto industry but also directly devastated associated projects. Backpack had just completed a $20 million funding round led by FTX Ventures and Jump Crypto before FTX's downfall. As the empire crumbled, approximately 80% of Backpack's operational capital evaporated. At that time, Backpack was positioned as a "wallet + xNFT operating system," aiming to provide Solana users with a safer, integrated entry point, avoiding reliance on centralized platforms.

In April 2023, during the bear market trough, Backpack quietly launched the Mad Lads NFT series with a mint price of 6.9 SOL. It went on to become one of the top NFT communities on Solana that year, with its floor price peaking at 229.4 SOL. Even today, as the NFT hype has faded, the Mad Lads floor price remains at 18.8 SOL, more than double its original mint price.

In November of the same year, Backpack obtained a license from Dubai's VARA and launched the Backpack Exchange, though it was only in limited testing at the time. By then, it had already built user trust through its wallet and NFTs, and was leveraging the exchange to monetize that traffic. In February 2024, Backpack completed a $17 million Series A funding round, reaching a valuation of $120 million. In January 2025, it acquired FTX Europe's assets for $32.7 million, securing a European MiFID II license, further strengthening its compliance foundation, and committing to handle FTX EU customer claims.

Backpack was born with a silver spoon, but also rebuilt from the ashes. Over nearly three years, Backpack has accumulated a total trading volume exceeding $400 billion, with user assets surpassing $350 million.

Now, it is attempting an even greater leap.

The Token Launch Plan and Equity Linkage

On February 17th, Backpack announced the start of identity verification prior to its TGE, the first step for users to claim tokens.

According to Backpack's published tokenomics, the total token supply is 1 billion. The pre-IPO total supply is 625 million tokens (62.5%), released in three phases:

• Phase 1 (TGE): Releases 25% of the total supply, or 250 million tokens. Of this, 240 million (24%) are allocated to points holders, and 10 million (1%) to Mad Lads holders. This phase is 100% allocated to users, with no internal team allocation.
• Phase 2 (Pre-IPO): Comprises 37.5%, or 375 million tokens, designated as "growth-triggered unlocks," released progressively based on key milestones (such as regulatory approvals, new product launches, and geographic expansion).
• Phase 3 (Post-IPO): Also comprises 37.5%, or 375 million tokens, deposited into the company treasury with a one-year lock-up period post-IPO, reserved for the team and investors.

From this token distribution plan, we can already see that the token launch is tightly bound to an IPO. Backpack is currently negotiating terms for a new $50 million funding round at a $1 billion valuation. Based on this valuation, the 20% equity reserved for the program would be worth $200 million.

In the brief history of the cryptocurrency industry, token launches have quietly evolved from an optional financing tool into the "default choice" and almost instinctive path for nearly all projects. As users, we are familiar with this model, but Backpack's plan extends beyond our familiar scope.

From an industry-wide perspective, this model fills a gap. Coinbase successfully IPO'd in 2021 but never issued a native token; DeFi projects like Uniswap issued governance tokens but did not pursue a public equity listing. Backpack is attempting a "dual-track" system, using tokens for community incentives and equity for long-term ownership—a precedent yet to be set in the crypto industry.

Is Token Launch + IPO Feasible?

Despite being bold and innovative, this plan faces significant regulatory challenges.

Under U.S. regulatory frameworks, most tokens are likely to be considered securities by the SEC. If deemed so, the company must comply with registration, disclosure, and anti-fraud rules. If an IPO is pursued in the future, the SEC will scrutinize the history of the token issuance, its structural design, and any potential compliance violations.

More complex is the potential "ownership conflict" arising from the coexistence of equity and tokens: IPO investors may worry about dilution of rights (such as voting power, dividends), while token holders expect value capture. This could be viewed as "dual financing" or misleading behavior. Especially during the Gensler era (2022-2024), with heightened enforcement, many projects abandoned IPO plans altogether.

In short, a token launch takes the "decentralized/on-chain financing" fast lane, while an IPO takes the "centralized/compliant/equity financing" slow lane. Backpack is attempting to drive both vehicles simultaneously, requiring exceptional structural design and regulatory communication skills. Otherwise, it risks IPO delays or regulatory penalties.

While there is no complete precedent in the crypto industry, there are partial ones. Coinbase, also a centralized exchange, completed its IPO in 2021, but it had actually considered issuing a token. Backpack co-founder Can Sun revealed in a podcast two years ago that he participated in Coinbase's IPO work, helping design its tokenomics. Although Coinbase ultimately chose a pure equity listing, this experience provided valuable reference for Backpack. Even then, he planned to realize this unfinished ambition at Backpack.

Can It Change the Industry?

Today, the reality in the crypto industry is that a vast number of tokens lose over 80% of their value within a year of launch. "Peak at launch" has almost become a curse. Backpack seems to be searching for another path: giving tokens a pathway to equity, thereby changing the incentive model.

In the past, the familiar model was "earn tokens through product use"—projects first build a good product, and users earn token rewards through usage, such as fee sharing, liquidity mining, or airdrops. Token value stems from the product's actual performance. Backpack's approach, however, seems more like using token expectations to boost company valuation—binding equity, narrating an IPO story, using the anticipated value of tokens to quickly gather capital, community, and attention, thereby raising the company's valuation and accelerating financing and product iteration. Tokens are no longer just reward tools; they become valuation engines.

Of course, this shift is fraught with uncertainty. How will regulators define it? How will rights be balanced between equity and tokens? Will the market truly buy into the narrative of becoming future shareholders? There are no ready-made answers. But in a moment of pessimism for the crypto industry, Backpack is at least attempting to introduce a new dynamic.

Backpack once rebuilt from the ashes; this time, it's trying to build a bridge across institutional cracks.