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Breakpoint 2023: Backpack | X

Backpack discusses their response to the FTX crisis and their plans for a new integrated wallet and exchange platform.

The notes below are AI generated and may not be 100% accurate. Watch the video to be sure!

Summary

Backpack, a participant in the cryptocurrency space, shared their journey and future goals at Breakpoint 2023. The talk began by recounting the moment they learned about FTX's insolvency en route to Miami—a loss amounting to 88% of Backpack's operating capital. In the face of this adversity, the team resolved to press steadily forward, inspired by Solana's ethos. Despite a turbulent period for both crypto and traditional finance sectors, Backpack sees blockchain as a robust solution to systemic financial issues. Their vision led to the creation of X, an integrated wallet and exchange platform designed to fortify and streamline financial transactions for users.

Key Points:

The Aftermath of the FTX Crisis

The speaker narrates the shock and financial impact of the FTX crisis on their organization. Despite losing a significant portion of their capital, they were galvanized to continue operations and innovate within the Solana ecosystem. This resolve culminated in the development of multiple projects, including Backpack.

The Vision Behind Backpack

Backpack's commitment lies in solving issues of financial infrastructure through blockchain technology. The Backpack team challenged the misconception that blockchains are a solution in search of a problem. Instead, they propose that the blockchain's capabilities are ideally suited for building a resilient and transparent financial system, especially post-FTX incident.

The Integration of Backpack Wallet and Exchange

Addressing the inefficiencies in current financial systems, Backpack announced an integration plan for their wallet and exchange platforms. The goal is to create a unified app that can seamlessly handle crypto transactions while offering a spectrum of custody solutions, maintaining both privacy for wallet users and compliance for the exchange.

Building Exchange Infrastructure with Compliance and Custody

Having reassured listeners of their dedication to privacy and regulatory adherence, the speaker detailed the complex aspects of compliance in building their exchange. They also stressed the technological features they're implementing, keeping computational integrity central to their custody approach. Proof of reserves and secure transaction authentication are key principles guiding Backpack's exchange development.

Facts + Figures

  • Backpack lost 88% of their operating capital due to the FTX crisis.
  • Following the FTX incident, Backpack launched successful projects like Backpack and MadLads.
  • Financial and banking sectors are facing crises, underscoring the weakness in financial infrastructures.
  • Backpack's X, the Backpack exchange, aims to integrate blockchain technology into core financial institution processes.
  • The team at Backpack aims to provide a full custody solution spectrum within their app, ranging from self-custody to a regulated exchange.
  • Comprehensive compliance strategies are in place to secure financial operating licenses globally.
  • By the end of 2024, Backpack intends to cover 95% of the world's GDP through their compliance solution.
  • Backpack is focused on computational integrity, proof of reserves, and authenticated transactions to ensure security and trust.
  • Collaboration with renowned auditors and the implementation of novel security mechanisms, such as zero-knowledge proofs, are part of Backpack's custody infrastructure.

Top quotes

  • "That packet lost 14.5 million dollars on that flight."
  • "As long as Raj and Tully were still here, as long as those guys kept coding, we would keep coding."
  • "Our financial infrastructure is weak...and blockchains solve a lot of this."
  • "A single app with everything in it."
  • "We have the wallet...fully privacy preserving, fully client side is zero tracking whatsoever."
  • "By the end of 2024 we expect to have 95% of the world's GDP covered by our compliance solution."
  • "This next slide is supposed to be like a joke... But here's the slide."

Questions Answered

How did the FTX crisis affect Backpack?

On a flight from Lisbon to Miami, Backpack realized the severity of the FTX crisis, which resulted in the loss of 14.5 million dollars—88% of their operating capital. This loss was devastating but also served as a catalyst for determination and innovation within the company.

What solution does Backpack propose for financial infrastructure issues?

Backpack advocates for blockchain technology as a robust answer to the current financial infrastructure's weaknesses. They propose that a transparent, verifiable, and auditable ledger provided by a blockchain can dramatically improve financial transactions.

What is the Backpack X exchange?

Backpack X is an integrated wallet and exchange platform designed to be an all-encompassing app for both self-custody and regulated financial exchange. The integration aims to provide a seamless financial experience for users within the crypto ecosystem.

What are the key security components of Backpack's exchange?

Backpack's exchange places emphasis on computational integrity, an execution layer with no single point of failure, proof of reserves with daily snapshot verifications, and wallet-based transaction authentication. These elements are designed to establish a secure, trustworthy exchange foundation.

How does Backpack plan to handle compliance and expand globally?

Backpack has assembled an expert compliance team and has embarked on an ambitious plan to secure financial operating licenses around the globe. They anticipate covering 95% of the world's GDP with their compliance solution by the end of 2024, forming a critical bridge between traditional and crypto-based financial systems.