Backpack Token Is Coming, And Dumping Won’t Be Easy: Here’s Why

Backpack Exchange announced plans to launch its token with a 1 billion token supply on Monday with a distribution model that prevents founders and early investors from profiting until the company completes a US initial public offering. The crypto exchange, founded by former FTX employees, will launch 25% of the total supply at its Token Generation Event, with the remaining tokens locked behind growth milestones and IPO requirements.

The tokenomics framework ties insider compensation directly to measurable business achievements rather than time-based vesting schedules. CEO Armani Ferrante stated the approach ensures "insiders 'dumping on retail' should be impossible" until the platform reaches what he calls "escape velocity."

Backpack serves approximately 48% of the global market currently and plans to pursue traditional finance integration alongside its crypto offerings, including banking infrastructure, fiat currency accounts, and securities trading capabilities.

How Does Backpack's Token Distribution Work?

The 1 billion token supply breaks down into three distinct tranches, each unlocking under different conditions designed to align team incentives with long-term platform growth.

At the Token Generation Event, 250 million tokens become available immediately. This represents 25% of the total supply and splits between two groups:

• 240 million tokens distributed to points holders from Seasons 1-4
• 10 million tokens allocated to Mad Lads NFT holders

The TGE date has not been announced yet, though Backpack indicated additional utility details will be released soon.

Another 375 million tokens, representing 37.5% of total supply, will unlock pre-IPO through achievement of specific milestones. These milestones include opening in new regions, launching new products, and demonstrating measurable regulatory progress. Each time Backpack expands geographically or releases a major feature, additional tokens become available to users.

The final 375 million tokens remain locked on the company's balance sheet until at least 12 months after a successful IPO. These tokens form Backpack's corporate treasury and cannot be accessed even if the company completes all pre-IPO milestones.

What Makes This Tokenomics Model Different?

Traditional crypto projects typically distribute tokens to founders, team members, and venture investors through time-based vesting schedules. A common structure might vest tokens over three to four years with a one-year cliff, allowing insiders to begin selling regardless of project performance.

Backpack's model eliminates direct token allocations to insiders entirely. Ferrante explained that "not a single founder, executive, team member, or venture investor has been given a direct token allocation."

Instead, the founding team holds equity in the parent company, and the company owns the token supply. Team members can only realize value from tokens after Backpack goes public or completes another equity exit event. This structure requires the company to access public capital markets and complete extensive regulatory work before founders benefit from token appreciation.

The approach prevents dilution of retail holders by connecting token releases to measurable economic activity. Ferrante stated that "the value of added growth created by new token unlocks must always be greater than the dilution of those unlocks" for the model to function properly.

Why Is Backpack Pursuing A US IPO?

Backpack aims to become a hybrid platform offering both crypto and traditional finance products through a single interface. The company is working toward banking rails worldwide, fiat currency accounts in major markets (USD in the US, EUR in the EU, JPY in Japan), and securities trading capabilities.

Ferrante described the company's vision: 

"We're trying to not only build great crypto products, but we're also trying to build great TradFi products." 

The exchange wants to serve retail users, regulated counterparties, and institutional clients through licensed products in multiple jurisdictions.

This regulatory-first approach explains why Backpack currently serves only 48% of the global market. The company has prioritized obtaining proper licenses over rapid geographical expansion, which Ferrante acknowledged "sometimes feels like running with a parachute."

The IPO timeline remains uncertain. Ferrante noted going public "might happen quickly, it might happen not so quickly, and in fact, it might not happen at all." The team has been working on the foundation for over three years, obtaining licenses and building infrastructure across different jurisdictions.

According to Axios, Backpack is in discussions to raise $50 million at a $1 billion pre-money valuation, potentially making it the crypto industry's latest unicorn company.

How Will Growth Milestones Trigger Token Unlocks?

The 375 million pre-IPO tokens unlock in stages as Backpack achieves specific business milestones. Each regional expansion or product launch creates an opportunity to distribute additional tokens to active users.

Ferrante outlined several growth levers that would trigger unlocks:

• Opening European Union markets
• Launching in Japan
• Expanding to United States users
• Introducing predictions markets
• Adding stock trading capabilities
• Rolling out payment cards

The framework treats tokens "like gasoline onto a fire," using new distributions to kickstart growth in each market the same way points programs drove user acquisition during the exchange's first four seasons.

This milestone-based approach differs from projects like MegaETH, which recently decoupled its TGE from mainnet launch but still uses a similar framework tying distribution to network development and user adoption rather than arbitrary time schedules.

Who Founded Backpack Exchange?

Armani Ferrante, a Solana developer, and Tristan Yver, a former FTX executive, founded Backpack Exchange. The team includes other former FTX employees who left before or during the exchange's collapse in November 2022.

The FTX connection provides context for Backpack's emphasis on preventing insider dumping. FTX's spectacular failure, which involved misuse of customer funds and fraudulent accounting, destroyed billions in user value. Backpack's structure prevents similar outcomes by ensuring the founding team cannot extract value from tokens unless the company succeeds as a regulated, publicly traded entity.

Conclusion

Backpack's tokenomics model eliminates traditional insider allocations by tying all team compensation to equity rather than direct token holdings. The 1 billion token supply distributes 25% at launch to existing community members, unlocks 37.5% through measurable growth milestones, and reserves the final 37.5% until at least one year post-IPO. 

The structure prevents founders from profiting before building a regulated, publicly traded financial platform serving both crypto and traditional finance markets. Whether this approach attracts more users or inspires similar models across the industry depends on Backpack's ability to execute its ambitious regulatory roadmap and reach its planned US public listing.

Resources

1. Backpack Exchange on X: Post on Feb. 9

2. Armani Ferrante on X: Post on Feb. 9

3. Report by Axios: Scoop: Backpack Exchange raising at $1B valuation

4. Report by CoinTelegraph: Crypto exchange Backpack to launch token with unlocks tied to IPO goal