Interview with the Founder of Backpack: CEX and DEX Are Not Opposed—Don't Try to Get Rich in a Single Bull and Bear Cycle
TechFlow Selected TechFlow Selected
Interview with the Founder of Backpack: CEX and DEX Are Not Opposed—Don't Try to Get Rich in a Single Bull and Bear Cycle
If you must choose any one of the 'deadly sins,' never choose envy.
Navigating Web3 tides with focused insightsCompiled & Translated: TechFlow
Podcast Source: Bonnie Blockchain
Original Title: No Fortune in Just One Bull-Bear Cycle! Don't Rush! Don't Be Jealous! 【Bonnie Blockchain】
Air Date: March 13, 2025
Key Insights Summary
In this podcast, BackPack founder Armani Ferrante dives deep into multiple core topics within the crypto industry—from the market significance of Meme coins to the unique value of NFTs, from the differing roles of centralized versus decentralized exchanges to designing user-friendly self-custody solutions.
He also shares his personal journey from being an Apple engineer to entering the crypto space, along with his unique perspectives on market cycles, project evaluation, and long-term value creation. Below are the key highlights from this episode:
- Meme coins aren't just "toys" in the market—they express emotional reactions to both positive and negative developments over recent years. They reflect frustration toward "air projects," scams, and regulatory uncertainty—like giving the world a middle finger.
- CeFi and DeFi aren’t opposing forces. Centralized exchanges serve as bridges between traditional finance and crypto economies. Their compliance enables real-world value (such as Treasury yields) to be brought on-chain.
- Don’t try to “make all your money” in one cycle—participate with a multi-cycle mindset.
- If you must choose a “deadly sin,” never pick jealousy. Instead of envying someone who made 2000% on a Meme coin, focus on what you can build for lasting value.
- We’ve designed a completely new trading platform where users can simultaneously earn lending and staking yields, while using those assets as cross-asset margin collateral. This dramatically improves capital efficiency—a feat hard to achieve on existing platforms.
- The true value of crypto lies in its global nature—not serving just one country or region.
- We can achieve real self-custody, preserving the most important and incredible core values of crypto, while avoiding the dangers of current self-custody models. In our upcoming product, you’ll get a familiar experience: a CeFi account plus an “extra Web3 wallet.”
From Apple Engineer to Ethereum, Then Solana
Bonnie: "I'm really excited to have you here today because you've achieved some amazing things at such a young age. For those unfamiliar, who is Armani?"
Armani Ferrante: "Oh, that’s a good question. Who is Armani? What am I…? What’s the standard answer? I’m a programmer, a father, a human being. Let me start from the beginning. I’m a programmer who entered crypto around 2017, drawn by Ethereum and the idea of a 'world computer.' Since then, I’ve been involved in various projects. Solana is probably where most of my well-known work began. I joined early when there wasn’t much on the network yet, contributing to early DeFi protocols, wallet infrastructure, and developer tools. Though I played a small role during that initial phase, it felt meaningful. Fast forward to today, I’m building a company with three main components: Backpack, a self-custodial wallet with a client-side key management system that connects to any app on any chain—similar to Phantom or MetaMask. We also have a sleek spot and derivatives exchange, and an incredible NFT community called Mad Lads, made up of passionate users worldwide."
Bonnie: "We’ll talk more about everything you’re building. But before that—you were an engineer at Apple, right?"
Armani Ferrante: "Yes, that was my first job after graduation."
Bonnie: "Many see that as the ultimate dream job. Yet you left—a high-paying, stable position—to say, 'Hey, I want to go into crypto and do something meaningful.' What changed your mindset? What drove that decision?"
Armani Ferrante: "Two main factors. First, reading the Ethereum whitepaper deeply inspired me. It felt like the coolest technology I’d ever encountered. The concept of a 'world computer' blew my mind—it was incredibly motivating. That was the attraction. And second, the 2017 bull run, when everyone in the office was trading Bitcoin and joining Discord groups. It just looked like the coolest thing happening, and I wanted in. That was it. Another reason I felt so driven was the contrast with Apple, especially compared to big tech companies."
Armani Ferrante: "Apple is a massive company—undoubtedly inspiring—but extremely secretive. I remember working on the iPhone X. To join that project, you had to take a training course and get security clearance just to learn details about the device. After going through all these steps, you finally got the device to develop apps. Then they gave you a black cloth. When using the phone in the office, no one else could see it. It was an environment where people didn’t really trust each other—at least not on major new launches. You couldn’t blog, tweet, or publicly share your work."
"Meanwhile, the crypto movement back then was the complete opposite—entirely open-source, full of passionate young people sharing ideas, discussing cool things they could build. There were forums online, conversations on Twitter, people flying in from around the world for conferences. I thought, 'Wow, this is so cool.' As a fresh graduate starting my career, it was incredibly inspiring. It felt deeply relevant and fascinating. My excitement was indescribable—I wanted to be part of it at all costs. So I quit, with no plan, no other job lined up. I just wandered online, probably annoying people in GitHub repositories, trying to figure out how to contribute. That was my starting point."
Bonnie: "So you quit first, then figured things out later?"
Armani Ferrante: "Exactly."
Bonnie: "That’s very different from most stories I’ve heard—people usually have a backup plan."
Armani Ferrante: "Yes, I had saved enough—I kept one year of living expenses, so I could survive without income for about a year. I told myself, 'Alright, great—I’ll live on ramen and microwave meals,' in a tiny apartment in San Francisco, and find a way into crypto. I knew I could always find another job if needed. But beyond wanting to work on Ethereum, I had no concrete plan."
Bonnie: "Was your first project Anchor, or did that come later?"
Armani Ferrante: "Oh, much later. My first project was actually a call I got—ironically, from someone at Alameda Research. This was before FTX, around January 2018. They told me about Alameda, saying they were building a trading firm or something. I had zero interest in working at a trading firm, but I thought, 'Well, let me check it out—you guys seem smart.'"
"It sounded interesting. I knew one of them—he was brilliant. So I went, but quickly realized it wasn’t for me. I didn’t want to work at a trading firm. I quit Apple to work on smart contracts, open-source software, and decentralized ledgers. So I left after three months and moved on."
"I started researching Ethereum State Channels—an extension technique popular at the time. The entire Ethereum community was focused on solving scalability. It was a great technology, but too slow for real use cases. We needed scaling solutions to push the tech forward. That was my first real passion—the first actual crypto job after Alameda."
Bonnie: "So Anchor came later. But it might be one of Solana’s most impactful contributions—wasn’t it like a security protocol for many Solana projects?"
Armani Ferrante: "Right. Over the next few years, I worked on various crypto-related things. Later, when the Alameda and FTX team got involved with Solana—investing in it, launching Serum, doing all these things—they called me again: 'Hey, we know you don’t want to work at a trading firm or exchange, but now we’re doing Solana. Want to check it out?' I thought, 'Hmm, sounds interesting—let me look.'
I learned more about Solana and found it incredibly impressive and inspiring—the kind of blockchain project I wanted to join. Its approach to scalability and technical challenges was compelling. So I joined Solana and immediately started building."
"You don’t have to look far to see that developer experience was a problem. Writing smart contracts on the network was extremely difficult—nothing like Solidity or mature Ethereum tooling. Building secure smart contracts on Solana was tough. I vividly remember the first Solana hackathon—most projects were easily hacked. Mainly due to lack of knowledge. The programming model and tech were completely different. No one fully understood what it meant to build smart contracts on Solana."
"Another issue was tooling. I concluded that if tools didn’t improve, no one would use the network. Turns out, that was somewhat true—many people tried it and left quickly because the tools were so bad. But I wanted to build on this network, so I decided to build tools for myself, so I could build more. That became my motivation. That’s how I built Anchor. Today, a large portion of Solana’s computation runs through smart contracts using this framework."
Bonnie: "You started with Ethereum, now you're on Solana. Any preference?"
Armani Ferrante: "Great question. They’re very different and unique in many ways. I have a special emotional connection to Solana because I was there from the early days, lucky enough to witness its growth from nothing. Ethereum holds a special place too—it was my original inspiration into crypto. Both are amazing. But currently, I’m very actively involved in Solana."
Bonnie: "Since you’ve worked on both Ethereum and Solana, I think you’re the best person to answer this. Recently, there’s been a lot of debate between Solana and Ethereum, partly due to price movements. Ethereum supporters say Solana is just a casino, while Ethereum has more 'fundamental value.' What’s your take?"
Armani Ferrante: "There's far more speculation and gambling on Ethereum than on any other network. So I think that comment is absurd—just moral posturing, not substantive discussion."
"If you want to discuss what’s happening on Solana, it’s trading. That’s the dominant activity. I think many conclude that one of Solana’s primary use cases is decentralized trading on-chain. Right now, the assets being traded are mainly Meme coins. These Meme coins have become vehicles for people to use this technology, which ultimately takes the form of decentralized trading engines."
"I think Chris Dixon put it most elegantly with his famous line: 'The next big thing starts out looking like a toy.' Meme coins are just that toy."
"Bringing capital markets on-chain—what Anatoly calls a 'Nasdaq at light speed'—is a deeply inspiring and noble goal that can genuinely improve global capital markets. So yes, whether on Solana or elsewhere, current use cases are largely speculative."
"And that’s okay. You could say U.S. capital markets were the same in the late 19th or early 20th century. It’s the same growing pains and lessons. It all comes down to the world learning new market structures and technological innovations that are changing everything."
Memes Express Emotion, NFTs Are More Efficient Than Real-World Luxury
Bonnie: "So I guess you’re a Meme fan, right?"
Armani Ferrante: "Well, it’s nuanced. I wouldn’t say I’m a Meme fan, nor do I hate Memes. I think Meme coins express market sentiment shaped by both the good and bad in the industry over the past few years. They express frustration toward 'air projects,' scams, and market unfairness. Disappointment over regulatory uncertainty. That emotion is like flipping the world the middle finger—rude, but meaning, 'You did this to us.' Everyone’s frustrated, and we feel powerless. Anyone trying to build something truly useful—like all the utility tokens over the past few years—has faced enforcement and regulatory actions. Even those pushing tech boundaries to build useful things have been hindered. That’s the environment where Meme coins emerged."
"Then look at these decentralized trading engines—they’ve evolved into a novel use case. Together, it created the perfect storm for the Meme coin frenzy. But you must know what you’re participating in. Meme coins are speculative mania—they’re absolutely not the final state of the industry. I’d never advise anyone to dump their life savings into them. Treat it like entertainment—like playing roulette or going to a casino."
"But I do believe Meme coins reflect the spirit of our times—a collective expression of sentiment within the industry."
Bonnie: "In the last cycle, we had NFTs and GameFi, which brought in many new users and retail investors. Now people say Meme coins are the new NFTs. Do you agree?"
Armani Ferrante: "Partially, yes. The special thing about NFTs is that they’re art—something everyone intuitively understands. So they reach a broad audience, not just crypto geeks obsessed with computers or open-source software. NFTs can integrate into mainstream culture in many ways—Eminem and Snoop Dogg rapping with their Bored Apes, or fashion brands like Zara incorporating Okay Bears into their stores."
"So I think NFTs have been the most mainstream format so far. And NFTs have another feature—they’re fundamentally useful. That might sound strange, but NFTs are the perfect technology to 'operationalize' luxury, to 'operationalize' status signals."
"Take Rolex, for example. Why do people buy Rolexes? Some appreciate the engineering and craftsmanship—those are real. But mostly, it’s a status signal. It says you care about watch culture. Why do people buy Birkin bags? Why is a handbag a phenomenon? Its value appreciates over time—for many, it’s an investment. But the logic is the same."
"Hermès has an incredible brand, but Rolex isn’t a particularly good luxury item, nor is the Birkin bag. Why? Because only someone in the same room can see my Rolex. If I’m wearing it now, you can’t even see it. I have to roll up my sleeve, turn my wrist, and say, 'Look at my Rolex,' then prove it’s real. How do you know it’s authentic? You just have to trust me."
"But NFTs are far more efficient. NFTs let you display your Rolex 24/7, 365 days a year—and prove it’s real online."
"NFTs also allow you to signal status to tribes—not just in one country, not just in a restaurant, not just in a parking lot showing off your Lamborghini—but to anyone in the world. You can build subcultures around artworks. These are deeply human things—storytelling, branding, art creation, signaling 'insider' vs. 'outsider' status. These are fundamentally useful."
"You can point to the entire multi-billion dollar luxury industry as proof. So for me, that’s the meaning of NFTs."
"So when you ask if Meme coins are the next form, I’d say—yes, in a sense, Meme coins are the next speculative wave. They’re the next hype, attracting massive capital and trading volume. But they’re not exactly the same. I don’t think they capture the soul and emotional resonance that art brings. Seeing a trading chart is a completely different experience from seeing a piece of art."
Bonnie: "One thing that makes Rolex and designer handbags truly valuable is that their value keeps rising, right? People see them as expensive, and that 'expensive' perception is constant. But with NFTs, prices go up and down. People can’t be sure if it’s expensive now or what it’s worth. So how can NFTs replace luxury goods?"
Armani Ferrante: "I don’t know how you feel, but to me, Mad Lads are already quite expensive. What’s the price now? Around 50 to 53 SOL. In USD? About $10,000. Looking at the long-term chart, it’s clearly trending upward. So it does have the characteristic you described."
"Of course, this doesn’t apply to all NFTs. What you describe is simply oversupply—like having too many clothing brands. Many clothing companies fail. I’m from Southern California—the birthplace of countless fashion brands, like in Orange County and LA. Just because many clothing brands fail doesn’t mean Gucci doesn’t exist, or Hermès doesn’t exist, or Nike doesn’t (though Nike isn’t purely luxury, it’s another category I won’t dive into)."
"Yes, many NFTs will only go down in price and eventually become worthless."
"But there are NFTs like CryptoPunks. I believe as crypto becomes more mainstream, and as we spend more time online, owning an avatar visible to the whole world will become increasingly valuable. Over time, it will grow in importance and become part of the world we live in."
"Everything of value is a Meme, but not every Meme has value. I think that’s the distinction."
External Recognition of the Crypto Industry
Bonnie: "Imagine your neighbor, an older Asian woman, asks you what you do. You say, 'I work on Backpack wallet, Backpack exchange, and Mad Lads NFTs.' She asks, 'What are those?' How would you explain it to her?"
Armani Ferrante: "If I were explaining to someone like that, I’d frame it in one of two ways. The simplest is comparing it to the stock market—though obviously not identical. The pricing mechanism is actually the most powerful and central technology in crypto—that’s the core. It’s what ultimately enables global coordination. Whether you’re in Tokyo, Taiwan, the U.S., Dubai, the UK, or Italy—we can collectively coordinate around price, and that’s how capitalism works, right?"
"So if I were explaining to someone disinterested in crypto—say, a neighbor—I’d describe it as reimagining markets, perhaps using stocks as the clearest example. Stocks aren’t what run the world, but they play a role. Then I’d extend that concept beyond stocks."
"I think the next most powerful and understandable example is NFTs—even if it’s not super popular right now. I’d also use Japan’s local payment systems. Japan is fascinating because it achieves many goals crypto wants—just locally. Many places in Asia do similar things. Have you used Pasmo? Amazing UX. I open my Apple Wallet, add my credit card, top up Pasmo, and use it for subway rides, lunch, dinner—everything seamless. The experience is like Apple Pay."
"But Pasmo’s problem—and broader issues with payment networks—is they’re local. If I go to the U.S. and want to take a bus, Pasmo doesn’t work. That’s a bummer. So how do we scale that payment tech—or broader fintech, like stock market functions—to the entire world? That’s where crypto stands out: it’s borderless. The financial infrastructure and fintech we’re building don’t serve just one country or region—they serve the entire world. I think that’s one of the most spectacular aspects."
Bonnie: "That’s very insightful because people outside crypto often say, 'If Japan can do it, why do we need crypto to scale globally?' But that mindset is a 'us vs. them' mentality, which shouldn’t be the case. It should be seen as a unified whole."
Armani Ferrante: "Yes, I completely agree. Honestly, one thing that frustrates me in the industry is how many people get stuck in narrow views—like 'only crypto matters.' But there’s a completely different world out there where all the truly important things happen—not in crypto. Those important things are the goods and services running our daily lives, not crypto itself."
"So I like to imagine what we’re building in crypto as ultimately bringing all that value into crypto—bringing those things—whether on-chain or into crypto apps. I think that’s a crucial way to solve industry problems."
The Uniqueness of Backpack
Bonnie: "Alright, you created Backpack Exchange. Why build an exchange? There are already so many. Is it because it’s one of the best business models, or do you have other goals with Backpack?"
Armani Ferrante: "Yes, great question. On the surface, you might wonder, 'Aren’t there already plenty of exchanges? Why another one?' Let me provide context on what’s happening in the exchange space today, then explain the unique positioning. Ultimately, it ties into a broader narrative we all recognize: crypto’s core mission is upgrading the financial system. As Coinbase puts it, replacing and upgrading finance’s 'Swiss system,' enabling hot-swappable financial infrastructure that runs the world. That’s a huge vision, right? But what does that actually mean? How do we concretely improve modern finance?"
"Now, let’s look at reality—what’s happening in the CeFi space today. Tokyo is a great example. Just recently—last week or this week, I’m not sure—some of the world’s largest exchanges were removed from Japanese app stores. Now there are no exchange mobile apps in Japan. Without a mobile app, you basically don’t exist—mobile apps are essential, right? If you can’t offer compliant CeFi services under local laws and regulations in Japan, that’s the baseline reality."
Armani Ferrante: "But you’ll find this is happening across all major economies. In the U.S., most firms are too scared to operate—everyone fears the U.S. government. You definitely don’t want to break U.S. laws. Europe is another strong example. All major global crypto derivatives exchanges have shut down or exited the EU market. They’ve all pulled their derivatives products. Why? Derivatives are their most important and profitable offerings in crypto. It’s a massive market. But why leave? Because regulators are tightening rules, and non-compliant players face consequences."
"It’s not a 'sexy' topic, but if you want to understand what’s happening, that’s reality. We can’t pretend it’s not."
Armani Ferrante: "Interestingly, I think exchanges are among the best products in crypto. Building an exchange is like building a financial institution—completely different from a typical tech startup, requiring entirely different skills and requirements. That’s the current state. There just aren’t many exchanges ready for a more mature industry—one moving into the mainstream financial world, where real value lies."
"We see giants like BlackRock and Stripe diving deep into crypto, going all-in. This creates incredible opportunities for a new exchange to succeed in a more mature landscape."
Armani Ferrante: "So that’s ultimately what we aim to do. I’m American—born and raised. No market matters more to me than my home country. I want to bring crypto to U.S. capital markets and scale it globally. We want to bring this ethos and superior product experience not just to the U.S., but worldwide. That’s also why we moved to Tokyo. Asia is vital—Tokyo, Taiwan, Vietnam, wherever you prefer. But not just Asia—Europe and the Middle East too."
"Crypto is astonishing because it’s borderless. Building a truly global exchange lets you create an incredible product and authentically tell the story of upgrading finance. That’s our starting point."
Armani Ferrante: "Then, from this stage, you can dive into specifics—exchange products, wallets, even blockchains like Solana. Fundamentally, I believe our positioning is completely different from other international exchanges."
Bonnie: "Can I summarize simply: from day one, you built this exchange to comply with regulations? Is that accurate?"
Armani Ferrante: "Yes, I think that’s a fair description."
Living in Japan, With Strict Crypto Regulations
Bonnie: "You mentioned you live in Japan, known for strict crypto regulations. Why did you choose Japan? And what should people outside Japan know about Japanese crypto that they might not realize?"
Armani Ferrante: "People often forget Japan was a major hub in crypto’s early days. Binance was originally founded in Tokyo. The Mt. Gox era, followed by the hack, led to tighter regulation and many leaving Japan. But what draws us back is Japan’s deep-rooted connection to crypto. We expect tailwinds—recent tweets suggest Japan may lower crypto taxes from 55% to 20%. We’re now seeing major Japanese firms adding Bitcoin to balance sheets. You see traditional institutions like SBI pushing for Ripple’s adoption in banking."
"Even before Trump’s election, Japan had a relatively progressive stance toward the industry. We’re talking about a top GDP nation globally. Yes, Japan’s compliance standards are high, rules strict—just like the U.S. But that doesn’t mean you ignore the U.S. or Japan. It means you commit fully to building a great product that operates in these countries. That’s why we see so much opportunity here."
Bonnie: "So is Japan’s regulation truly strict, or is it just public perception?"
Armani Ferrante: "Oh, it’s definitely strict. Absolutely true. We’ll be the first exchange to obtain a full license from scratch since FTX collapsed. The last one to do so was ByteDance. It’s a multi-year process. You can’t just fill out a form and start offering crypto services. It’s not that simple."
How to Judge Cycles and Alpha Projects
Bonnie: "As a regular user or trader, I look at metrics like Bitcoin dominance to judge market cycles. As an exchange founder, you must track different indicators. What do you watch to determine which cycle we’re in? Can you share some metrics and your view on the current market?"
Armani Ferrante: "There are many classic financial metrics. But a more subtle approach—actually, you don’t need to be an exchange founder—just watch the number and quality of new projects entering the space. That’s the most important thing. You can largely ignore financial metrics—focus on human capital. Watch who’s entering the field—that tells you everything."
"Simple example: when I joined Solana in 2020, I looked around—who was coming in? Just that alone told me Solana would succeed. Who were they? People quitting Citadel to join Solana; Jump Trading joining; obviously FTX and Alameda at the time. Plus, others quitting big tech to start ventures—Apple, Facebook, etc. This is the most critical metric for evaluating any crypto ecosystem—L1 or otherwise—because humans are ultimately building and solving problems."
"Now, as the industry matures, we’re entering a completely different market dynamic. It’s common knowledge now—crypto is no longer a standalone, niche market. It’s increasingly influenced by macroeconomics. A Bitcoin or Solana ETF might affect prices, but interest rates matter more. Macro policy now affects both traditional and crypto markets because major funds and traditional institutions are allocating to crypto as an asset class—something unheard of before. That’s my market view."
Bonnie: "Among those entering crypto now, how do you know who’s building truly great projects? To regular users, all projects look cool, marketing looks solid."
Armani Ferrante: "That’s the so-called 'Alpha,' right? That’s where money is made—figuring out how to distinguish truly great projects from just great marketing. I think it’s genuinely hard. Distinguishing a real builder from a great marketer involves many layers. For most people, it’s not a game they should play."
"I think most can handle it in three ways. First—the simplest (not financial advice): most can adopt a simple 'barbell strategy.' If you decide to allocate to crypto, assign a small percentage—say 5% or 10%, a reasonable, responsible amount—to crypto, mentally prepared to lose most of it. Put that into Bitcoin. Bitcoin won’t disappear—it’s one of the world’s most important assets. You’ll be fine. Then, allocate the rest speculatively."
"But I think the most unique thing in crypto is using products—seeing which ones are excellent, which your friends use, which genuinely add value to your life. That’s one of crypto’s most spectacular aspects—users can own what they use and gain immense value. The classic example is Uber. As far as I know, Uber wanted to issue equity to drivers, but couldn’t due to securities laws—drivers weren’t accredited investors. But in crypto, I can spin up a Bitcoin miner or Solana validator, start mining, or provide liquidity to an AMM and earn Uniswap tokens. I can truly participate in and earn assets from decentralized networks."
"That might be another incredible way to invest—spend your time and resources on things meaningful and enjoyable to you. I think it’s a fantastic way to find Alpha and make serious money. There are indeed many hidden but exceptional projects in crypto. So that’s another path—don’t put all eggs in one basket."
Bonnie: "In crypto, whether you’re a developer or investor, you constantly see dazzling new things emerging. How do you tell which narratives or hot projects are real winners versus fleeting bubbles?"
Armani Ferrante: "It depends on what you’re doing. If you’re just playing the 'chase the trend' game, sure, go ahead. But I tend to avoid it. I prefer first-principles thinking: What’s truly valuable to the world? What genuinely improves people’s lives? What creates something entirely new—not lasting one or two cycles, but multiple cycles, maybe my entire lifetime? I focus on real builders—yes, it sounds cliché, but these people truly strive to change the world. They’re rare—just like visionary founders in traditional startups."
"I usually advise staying away from chasing trends, blindly following popular narratives. Think deeply about what’s fundamentally valuable. A big mistake in crypto is the collective delusion that 'value doesn’t exist,' that intrinsic value doesn’t matter. It’s a shared illusion. Too many believe intrinsic value isn’t real. But the truth is, there are things people value—curing cancer is valuable, global borderless instant payments are valuable, an unmanipulatable, fair trading market is valuable. These things exist. Find them. Focus on them. Of course, there are other things—speculative assets, Meme coins, gambling—they have fun and purpose too. But for those approaching it from an investment angle, keep it simple. Focus on what moves us forward."
Avoid Envy, Success Comes From Persistence
Bonnie: "Most people struggle seeing friends make huge money on a Meme coin while they’re in more stable assets. Like earning 20% while a friend earns 2000%."
Armani Ferrante: "Charlie Munger once said if you must pick a deadly sin, never pick 'jealousy.' There are better sins to choose. Don’t be jealous. This applies not just to crypto, but everywhere. The fastest way to unhappiness is comparing yourself to your neighbor—it’s a direct path to misery."
Bonnie: "If you could sit down with anyone tomorrow, who would it be and why?"
Armani Ferrante: "I just mentioned Charlie Munger—he unfortunately passed away. He would’ve been a great choice."
Bonnie: "But he seemed to dislike crypto."
Armani Ferrante: "Exactly why I’d want to talk to him. I think he was incredibly wise—with what he called 'worldly wisdom,' tons of common sense and rich experience. Many of his views deeply resonate with me. From an investment philosophy standpoint, I might be a rather boring person, but I’d love to discuss crypto with him—maybe convince him it’s not just 'rat poison.' There are many sincere, interesting people in crypto trying to make the world more interesting and better."
Bonnie: "It’s hard to convince many older generations about crypto. As you said earlier, the easiest way is comparing crypto assets to stocks—they’re familiar with stocks. But they might counter: 'Stocks have factories and physical assets—what does crypto have?' How would you respond?"
Armani Ferrante: "Excellent question. The best example is the 'world computer.' Take Solana or Ethereum—any smart contract platform you like. Here, you have a decentralized computer—no single operator, tamper-proof, usable by anyone, anywhere, regardless of religion, ideology—socialist, communist, capitalist. It runs in mainland China, the U.S., South Korea, Europe—anywhere. This shared, trusted computer is an astonishing innovation."
"Of course, crypto has many 'air projects'—just like penny stocks in the U.S. are full of garbage companies. From the dot-com bubble to today’s listed but worthless firms—this isn’t unique to crypto. But you don’t throw the baby out with the bathwater. You find the real gems and support them. Everything has nuance."
Bonnie: "You mentioned believing in the value of what you build. But surely, among the many things you’ve done, some you eventually abandoned—things you thought great but turned out unworkable. So the deeper question: how do you judge whether a project needs more time as a long-term bet, or it’s simply doomed? Like many call Jensen Huang a genius, but NVIDIA waited decades for AI’s explosion. How do you make such judgments in a finite life?"
Armani Ferrante: "We’re taught a 'lie' growing up—that geniuses create incredible companies with extraordinary foresight, seeing the future and building paths to it. I think that’s partially true, but the journey is far more mundane and humble than we imagine."
"You mentioned Jensen Huang of NVIDIA. I recall watching a video where he said something similar. He noted many try to quickly solve very hard problems, chasing 'sexy' challenges. But he said you can focus on solving small, boring problems—just stick with it long enough. You can’t fully predict the future. I highly doubt he foresaw AI exploding exactly as it has today, or GPUs becoming core computing resources. But directionally, you could foresee AI as a trend, increasing compute demand. That’s foreseeable. But predicting the LLM (large language model) explosion? Nearly impossible."
"The reality is, people 'climb mountains' every day. They show up, solve one problem after another, for a long time. Sometimes it works, sometimes not. But as Charlie Munger said, those who persist long enough eventually succeed. You do need to forecast the future, have vision, set conditions for success—but you also need to create conditions for luck. Predicting the future is hard. The best you can do is solve one problem a day, keep going, until one day it works."
Backpack’s 2025 Plans and Revenue Details
Bonnie: "I love that explanation—many think entrepreneurship is glamorous and exciting, but it’s actually built on countless small, boring tasks. So what are Backpack’s global plans for 2025?"
Armani Ferrante: "We’re in Japan now, aiming to launch here, so we’re going through the licensing process. This will be a major milestone—we’re very excited. Europe is another key market—we’re eager for that too. We’ve invested heavily and are still pushing hard to go live. Many are involved—we’re thrilled."
Armani Ferrante: "Then, I think our most important moment will be around 'seasonal campaigns.' We’ve spent enormous time building products, setting up the company, securing global licenses—just to stand at the starting line. It’s hard to overstate the effort required to launch responsibly and compliantly. So our real marketing push starts in March."
"This will be through seasonal events—we’ll finally guide early users to the exchange, as core features are complete and we can engage the real community. Campaigns may last six months to a year—we’re very excited."
Bonnie: "For newcomers to your exchange—say, active users on other platforms like Bybit—what differences will they notice immediately?"
Armani Ferrante: "When using an exchange, you ask: 'What can I do with my funds?' Usually, the answer is: nothing. So it’s all about capital cost and opportunity cost. If you can answer that—letting users earn more from the same funds or trades on your platform—I think you have a viable business model. That’s central to our thinking. Let me give an example of what you can do—or soon will be able to do."
"Suppose you deposit your SOL (Solana token) into the exchange and lend it to a money market. Fine—other exchanges have lending. You earn yield—2%, 5%, depending on demand. Good, solid product. But what if you add staking yield on top? Say, on top of 2%-5%, you get an extra 8%-10% SOL staking yield. That’s interesting—I haven’t seen anyone do that. But what if we go further? What if you let lent funds serve as collateral for futures trading in a cross-margin, cross-collateral system?"
"Then you’re not just earning 8%-14% or 15% APY—you can also use it as margin balance for futures trading. That’s highly attractive. That’s the inspiration behind our futures product. We call it 'Interest-Bearing Futures,' not traditional perpetuals. We aim to maximize capital efficiency—integrating spot margin, lending, and perpetuals into a single sub-account, enabling cross-collateral and cross-margin in ways unseen since FTX. Despite FTX’s flaws, their product was great—people loved it. What we’re building is fundamentally different from FTX or any existing exchange. Our core is helping users earn efficiently—that’s our product design foundation."
Bonnie: "Why haven’t other exchanges done this?"
Armani Ferrante: "The only answer might be 'path dependency.' Big firms have massive codebases and established business models—changing that is extremely risky. Without rewriting from scratch, it’s nearly impossible. I think that’s the practical reason: it’s hard to change, and users are accustomed to current flows. You can extend this to any big company vs. new startup. Why didn’t Facebook build TikTok? They had video on Facebook. Why didn’t Instagram? They could’ve, but didn’t. These things are hard to pivot post-facto."
Bonnie: "Many users hearing this might be intrigued but ask: 'Where does the yield come from?'"
Armani Ferrante: "Any crypto exchange or product should be able to answer this simply. Exchanges may be complex, but not inexplicably so. If someone can’t explain it simply, there’s likely a problem. That’s my basic view."
"So where does the yield come from? Simple. Two sources in my earlier example. First: peer-to-peer money markets. If you’ve used DeFi protocols like Aave, you know it’s straightforward: a lending pool where users deposit assets, borrowers withdraw. A simple utilization curve defines the interest rate model. As utilization rises, rates gradually increase. At 100% utilization, rates may spike sharply."
"Simply put, yield comes from borrowers. Borrowers pay lenders—that’s it. That’s source one. Source two: staking yield. We haven’t fully implemented this yet, but I’ve tested the idea on Twitter and with users—feedback is very positive. Many assets just sit idle on exchanges. Staking your SOL adds no extra risk. My goal: when you deposit SOL, we stake it immediately. If you borrow, you still earn staking yield. Where does that extra 8%-10% come from? Simply—staking."
"Same as manually staking in a wallet to any validator. But the advantage of a centralized exchange is we can stake on behalf of users, achieving higher capital efficiency. Earn margin collateral yield, lending yield, and staking yield—all at once. No other exchange does this. It’s a unique CeFi advantage."
Bonnie: "I think this is great—many are interested in extra staking yield but fear DeFi complexity. This feature would be very appealing to new users."
Armani Ferrante: "Absolutely agree."
Don’t Expect to Get Rich in One Cycle
Bonnie: "Agreed. For those experiencing their first bull market, what advice do you have?"
Armani Ferrante: "The most important advice: don’t expect to 'make enough money' in one cycle. You won’t 'make enough' in one cycle. Some might get lucky—like winning the lottery. But if you can shift from a 'single-cycle' mindset to a 'multi-cycle' perspective, your decisions improve. That mental shift increases your odds of greater success—though not guaranteed."
"So I think that’s the key: don’t FOMO-in blindly, don’t envy friends who got rich by luck. Your chance will come—just over multiple cycles, not one."
CEX and DEX Are Not Opposed
Bonnie: "I love that advice. Last question—if you could erase one current crypto narrative because it’s complete nonsense, what would it be?"
Armani Ferrante: "Great question—my answer might 'make me some friends' (laughs). Let me address a personally sensitive narrative. Many believe DEXs and CEXs are opposed—that DEXs exist to replace CEXs. This is completely wrong and fundamentally misunderstands CEXs’ role in the market."
"Let me use my favorite example. Circle (issuer of USDC)—though they don’t call themselves a CEX, functionally, Circle is a centralized exchange. You can deposit USDC from any chain—say, Solana—swap it to USDC on Ethereum, or deposit fiat and get USDC on Solana. They solve complex compliance, interface with treasuries, convert fiat to Treasury yields, and bring those yields on-chain. That’s the incredible work Circle and stablecoin projects do."
"Look at DeFi—almost all trading on Solana DeFi uses USDC. So you could say a CEX is actually fueling the entire DeFi ecosystem."
"Thus, the idea that 'CEX and DEX are opposed' is absurd to me. I think the debate shouldn’t be 'centralized vs. decentralized'—that’s more of an implementation detail, not the core issue. The real debate should be 'compliance vs. censorship resistance.' Compliance inherently implies some level of censorship. If you’re compliant, you must censor users violating laws. That’s what compliance means."
"Different regions have different rules based on whom you serve. But you choose compliance because it grants access to real-world value—like Treasury yields. Circle can unilaterally freeze any USDC because they must comply if law enforcement demands it. What they gain in return is Treasury yield—and people deeply care about accessing that."
"This might sound absurd—common sense outside crypto, but foreign inside. That’s why the compliance role of CEXs is so vital. They bridge real-world goods, services, and value into the crypto economy. Whether fiat, stablecoins, or compliant order books for institutional investors, CEXs play a crucial role."
"So I think this is a major misconception. When I hear people say, 'We’ll be part of DeFi' or 'We’ll replace Coinbase because our on-chain product is better,' I think—your on-chain product is great, and that’s a direction the industry should push. But don’t throw the baby out with the bathwater. Much of what these companies do is essential for running a fully on-chain economy."
"It’s a very subtle conversation—and a key misconception for me."
Bonnie: "I love your explanation—we often discuss this. Do you think the 'CEX vs. DEX' debate is just a way for DEXs to attract more users—by spreading fear that CEXs might collapse or seize funds?"
Armani Ferrante: "First, I don’t think it gains them customers. I truly believe that. I think product quality ultimately decides success or failure—not what you tweet. Twitter chatter is largely meaningless. People don’t care. So I think this narrative is more about differentiation—creating a justification for existence—but lacks real impact."
"Second, it’s factually wrong. Many refuse to admit this, but I’ve been sharing a story lately because I was shocked by the data. A few days ago, I opened a wallet app—not ours (Backpack), but another. During seed phrase setup, it displayed: 'Every year, $4.2 billion disappears due to lost seed phrases.' Yes—$4.2 billion annually! That’s more than all exchange losses combined."
Self-Custody for the Masses, New Product Coming
Armani Ferrante: "Therefore, the advice 'move your funds from exchanges to self-custody wallets'—while well-intentioned—only suits a tiny minority: those deeply familiar with computers, cryptography, and self-custody. For most ordinary people, it’s not feasible. In fact, forcing everyone into self-custody could backfire. You give people a knife, and they end up cutting themselves. We must acknowledge that."
"One of the things I’m most excited about is solving this. I believe we can achieve true self-custody—preserving crypto’s most important, incredible core values—while avoiding the dangers of current self-custody models. I won’t dive into technical details, but I believe these problems are solvable. I believe new iterations of self-custody will emerge, easy for ordinary people to use."
"As for that narrative, I think it’s more 'flippant marketing'—lacking real-world basis, dishonest about people’s actual situations globally."
Bonnie: "But that narrative gets repeated so much people start believing it. Especially after FTX, people say: 'Even giant exchanges like FTX can collapse and take your funds—why not just hold your seed phrase?' But I always think—I’d never let my mom manage her seed phrase. It’s practically impossible. So I’m curious—how do you solve this? Can you explain briefly?"
Armani Ferrante: "Of course, it’s a tough question—technical, but I’ll explain at a high level. There’s a technical term: 'account abstraction.' The idea is simple: instead of your wallet (like Ledger) directly owning your assets, a smart contract owns them, and your Ledger controls that contract."
"With this small change, I believe we can solve all self-custody problems while preserving true self-custody. Let me give a simple example. You know how multisig wallets work—like Solana’s Squads Multi-Sig or Ethereum’s Gnosis Safe? They let multiple wallets jointly control assets—say, both Bonnie and I must sign to move funds. Powerful mechanism."
"Now let me describe the user experience of our new product, currently in private iteration. Not officially launched, but already running on mainnet with some users. Here’s how it feels:"
"You log into your exchange account—email, password, 2FA—just like Coinbase or Binance. You trade, click buttons, view wallet balances. But there’s also a 'Web3 Account.' You might wonder: 'What’s this?'"
"Enter it—your NFTs are there. You use DeFi protocols—Aave, Camino. Swap tokens on Uniswap or Jupiter. Send unsupported tokens. The whole experience feels just like a CEX."
"Say you want to sell an NFT—system asks for 2FA. You grab your phone, open the authenticator, enter the code. Normal, right? But there’s an extra step—it asks for a signature, say, from your Ledger wallet. That’s 3FA (three-factor authentication)."
"So you have a familiar experience: a CEX account plus an 'extra Web3 wallet'—part of 3FA. You can choose 2FA only, or add 3FA—based on your security needs. The extra factor could be your Ledger, hot wallet, iCloud-stored keys, or other forms."
"If you accidentally drop your Ledger in the ocean, no backup? No problem. Contact customer support, verify identity—submit ID—and recover your wallet, just like recovering a bank or exchange account."
"Someone might ask: 'This sounds too good—must be a catch. If the exchange collapses like FTX, do I lose everything?' My answer: no. You only need your Ledger and internet access to a validating node to retrieve your assets. That’s the user experience."
"This way, we solve the problem of asset loss due to user error in current self-custody models—while preserving self-custody’s core advantages."
Technical Explanation of Multisig
Bonnie: "But if I can call customer support to restore access, doesn’t that make it just a CEX?"
Armani Ferrante: "It’s a subtle distinction. The user experience resembles a CEX, but custody isn’t centralized. Here’s why: no matter who you are, no matter where you are—even if the exchange tries to steal your assets—you can unilaterally reclaim them. If Backpack—or I, Armani—were evil and tried to steal Bonnie’s crypto, it wouldn’t work. You can always say 'no'—because I can never steal your assets. Let me explain why."
"The underlying structure is a multisig wallet. Specifically, a '2-of-4' multisig (actually '2-of-5,' but '2-of-4' for simplicity)."
1. First Layer Signers: Immediate Signers
- One immediate signer is your wallet—your Ledger.
- Another immediate signer is the exchange’s infrastructure.
- Normally, you log in via exchange account, click 'sell NFT' or 'transfer.' The exchange provides one signature, you provide the second via Ledger. Transaction completes. Fast, seamless UX—feels just like a CEX.
2. Second Layer Signers: Delayed Signers
- Two additional signers:
- Your Ledger again, but with a time lock (e.g., 7 days). Using this requires waiting 7 days for the transaction to go on-chain.
- The exchange’s infrastructure, but with a longer time lock (e.g., 90 days).
- If the exchange collapses (FTX scenario): Use your Ledger for immediate signature, wait 7 days for the time-locked signature—your assets are fully returned.
- If you lose your Ledger (e
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
深潮TechFlow
