Original Title: The Truth Behind Crypto's Super Apps With Mert Mumtaz & Armani Ferrante

Original Source: The Rollup

Original Translation: Deep Tide TechFlow

· Guests: Mert Mumtaz, Helius CEO; Armani Ferrante, Backpack CEO

· Hosts: Robbie & Andy

· Air Date: April 21, 2025

Key Points Summary

· The race for the ultimate crypto super app is heating up. Who will master the user experience?

· This episode features conversations with Helius CEO Mert Mumtaz and Backpack CEO Armani Ferrante. Armani shared his journey from Apple to Alameda Research and how this journey led him to build one of the fastest-growing platforms on Solana.

· Despite the market grappling with tariff tensions, institutional adoption of cryptocurrency is quietly accelerating. We delve into the "Fat Wallet Theory," Bitcoin's evolving role in smart contract platforms, and the opportunities brought by the integration of finance and cryptocurrency.

· This podcast also discusses how Backpack is balancing between anti-censorship and compliance, which is also one of the biggest challenges facing cryptocurrency's entry into the mainstream market.

Highlights Summary

· Bitcoin is the first and only true Meme, in the purest sense.

· As long as everything is a Meme, Bitcoin will always be the value cap for all these crypto tokens.

· Everything starts with a trading platform, starts with liquidity.

· I always felt that Alameda and FTX's culture was a bit loose, and that kind of engineering culture is not the environment I want to be involved in.

· Backpack's build-out is more like a traditional engineering-driven company, and our culture is heavily focused on product and building great things for users.

· I believe now is an excellent time to reinvest in building.

· One of the most valuable things in the current industry is bringing more value onto the chain.

· Finance itself does not have a direct use; it is just an accounting system used to transfer representational assets. What is truly important is real-world goods and services.

· As the real world gradually integrates and accepts the crypto world, cryptocurrency will truly drive the upgrade of the financial system. Only by combining real-world assets and rules can we achieve this goal.

· We all believe that cryptographic technology will become a key pillar of the global financial system, but we still have a long way to go.

· A bridge is forming between DeFi and the traditional financial world. Bitcoin is that bridge, and its dominance is rising.

· Institutions may provide significant help to Ethereum and could drive a rebound in the Ethereum price.

· The total value of the entire crypto market is still less than Nvidia's market capitalization. We all believe that this situation will not persist.

· Cryptography, finance, and technology will penetrate deeply into the financial sector, closely connected with every major financial institution globally.

· You must have one of these two attributes: either be censorship-resistant or compliant. Anyone in the middle has no way out, and I firmly believe in this.

· So many RWA companies have been created, why has none succeeded? Why aren't we all using tokenized securities on-chain now? Because no one has the distribution element, no one has contributed to RWAs like Coinbase did for Circle.

· Backpack is a very special product, situated between two economies: on one side, the traditional economy, i.e., the traditional banking system, and on the other, the crypto economy.

Introduction to Armani and Backpack

Andy: Welcome back to "The Roll Up." Today, we have invited Mert and Armani to discuss Backpack's amazing growth, the story of the Fat Wallet theory, Solana's macro updates, and the dynamics of this field. I'm eager to learn about your backgrounds, especially your experiences collaborating with some interesting individuals in the past, and how these experiences led you to create Backpack.

Armani:

My experience is somewhat ordinary on one side and somewhat special on the other. I entered the cryptocurrency space in 2017. At that time, Ethereum was in the midst of a bull market, and the price was skyrocketing. While working at Apple, I saw my colleagues trading. I read the Ethereum whitepaper and then made the switch, and the rest became history. My initial goal was to work on Ethereum smart contracts in 2017 and 2018, but by a stroke of luck, I joined a small trading firm, Alameda Research, based in Berkeley, California, before FTX existed. Basically, I worked there for about three months and quickly realized it wasn't what I wanted, so I left. This was before the FTX story, when Sam and some people from Jane Street were doing a lot of trading, mainly in Korea and on some early exchanges.

Through my work with Ethereum, I have been involved in the development of some L2 technologies, worked on state channels for a while, and also worked on other L1s. I had a strong interest in scalability issues, as did many others at the time. Later on, I went through a winding path, contributing to the development of some open-source technologies. In 2020, when FTX and Alameda started investing in Solana, they reached out to me again, asking if I would be willing to work for Solana. So I started researching Solana, met many people, felt very excited, and believed it was the coolest crypto project at the time, truly beginning to realize the "world computer" dream that attracted us to this field.

Mert: By the way, I created Anchor. Do you guys know what Anchor is? Is there a corresponding tool on the EVM, Armani?

Armani:

There is no direct equivalent tool because there are many other tools that can be considered similar to things like Solidity and Foundry, even going back to early Truffle days. If you want to know about early Solana development, I was involved in many early Solana projects, including wallet tools, DeFi, and developer tools, among others.

Armani's FTX Departure Experience

Robbie: We won't keep talking about FTX, but based on what you mentioned about your early feelings, what made you feel like you didn't want to stay there for long?

Armani:

I felt that Sam is a trader, and I am an engineer. In a company managed by a trader, traders usually have trading at the core, focusing on how to maximize profits, which is not the goal I pursue. I left Apple to work on open-source projects, and I see things more from an engineering perspective. The way Backpack was built is more like a traditional engineering-driven company, where our culture is very focused on product and building great things for users.

I always felt that Alameda and FTX's culture was a bit loose, and this kind of engineering culture was not the environment I wanted to be part of.

Solana's Technical Vision

Robbie: Cryptocurrency indeed has two aspects: financial and technical. Now let's talk about the technical aspect. You joined Solana because of its mission to become a world computer, which I thought was Ethereum's goal. What changed?

Armani:

This question can be looked at from multiple angles. For me, I was researching state channels and L2 technology in 2018 and 2019. At that time, Ethereum was heavily focused on sharding and Serenity design. I quickly realized that this was fundamentally unworkable and a very bad idea.

Sharding is not scaling in the traditional sense. What you really need is a technology feature that scales linearly horizontally with respect to some resource. Just like traditional databases, such as DynamoDB or Cassandra, these innovative NoSQL databases, you just add more machines and the system scales infinitely.

This was knowledge I first encountered in advanced database research, and Solana was actually the first project to achieve this in terms of machine resources. By adding more cores, leveraging Moore's Law, as machines become more powerful and faster, you can achieve higher throughput in the system. You can leverage techniques like parallel processing and pipelining. As an engineer, I believe Mert also has the same idea. It is very clear that a single-threaded virtual machine does not work. If you ask any engineer in San Francisco, they will tell you the same thing.

Actually, this was the goal that people pursued during the bull market in 2017 and 2018, and many professorial projects received funding. Many smart people were looking to solve the scaling problem. Later there was Sui, Aptos, and now there are projects like SEI and Monad. But in fact, all of this is applying relatively mature, modern system technology in a blockchain context. Honestly, it was very obvious at the time, it was just an execution problem and who really had the engineering capabilities to implement it. Solana was the first project to achieve this goal at scale. Ethereum was evidently influenced by path dependency and technical debt, unable to rebuild the entire system from scratch. So there are a lot of nuances in this story. But overall, Solana is the first team to successfully achieve this goal, which makes me very excited.

Current Market Analysis

Andy: The market has always favored the composable Web3 idea, and we've seen many fast, cheap, and well-designed blockchains succeed. We are still very excited about expanding this ecosystem to thousands of chains (whether they are Rollups, network extensions, or standalone L1s, etc.).

Mert, what is happening in the market? Will Solana reach 500?

Mert:

The current situation is relatively clear. Although the prices may seem somewhat unreasonable, the direction is evident. Trump wants other countries to pay more, while other countries respond, "No, we are also powerful, so you must pay more too." As a result, countries have been increasing tariffs, affecting businesses, and prompting people to withdraw funds from the market.

Recent macro factors are indeed intriguing, with Solana, Ethereum, and Bitcoin prices all decreasing. Although the market trend during this period is not entirely certain, people attribute it to some seemingly absurd reasons, like Pump.fun selling off tokens rather than holding them. I often say that whenever there is an economic downturn, we should thank Pump.fun or Nvidia.

The comparison regarding Memes is quite interesting. Someone recently tweeted that Trump claimed he could stop tariffs on other countries but not on China. Within just four to five minutes, the market gained a market cap of around $2.5 trillion, surpassing the entire cryptocurrency market cap. However, this tweet was false, and the market dropped again five minutes later. I think this is essentially a suited-up Meme. The dynamics on Twitter are always unpredictable, and content posted casually can cause a stir.

As for the impact on cryptocurrency, I believe it is entirely different from past cycles. Previous cryptocurrency events were almost always due to internal collapses. Initially, it may have been due to a lack of use cases, seen as a Ponzi scheme; later, it was due to a certain exchange going bankrupt or other scams erupting. Take the FTX incident, for example— I was not worried at the time, but others were very concerned. Because if you look at reality, so far, nothing has truly scaled or functioned well like Solana did, especially two and a half years ago. It can now be said that there are viable alternatives, but at that time, there really weren't.

However, now that I have just returned from New York, the mood is completely different. This is why combining your thinking with too much historical data is a mistake. We have been through three cycles, so cryptocurrency is still in its early stages. Not only cryptocurrency, but smart contract platforms are also very early in their development, perhaps only about three years old. Due to slow institutional action and long sales cycles, they started the process months ago and are now fully engaged. The number of inquiries we are receiving now from institutions, exchanges, and various fintech companies is at the highest level we have seen during the bull market period.

So, despite the red on the screen and the gloomy-looking candlestick charts, the reality is that these companies are actually getting on-chain. Even if Trump may cause temporary disruptions, he has still done a lot of good for cryptocurrency, with many lawsuits against exchanges being withdrawn. Overall, I believe now is an excellent time to reinvest in building.

Andy:

Yes, it seems like this is the biggest disconnect I've seen between fundamentals and price action. Many research releases have been particularly bullish. The news about the ETF is also insane. I've never seen so many applications from legitimate companies, like PENGU applying for an ETF. Now we'll see how these will unfold. There's continuous institutional pressure in the market. I flew from Brazil to New York today and will be there next week. I want to tap into that atmosphere, get into that mindset because I feel there is a huge difference between what's happening on Twitter and the market, and the mindset of these institutions. I feel like in my seven years of working in cryptocurrency, we have finally achieved a neutralization of professional risk. After the bear market in 2017, I was very concerned about whether this industry would recover, and if I needed to look for another job. I did some online marketing work, and then returned to this industry in 2018 and 2019. Even in the last bear market, I was thinking, can we make it through? Now it feels like the professional risk has been mitigated, and those who think long-term will prevail.

Armani:

One key point you mentioned is the convergence of the world. The native cryptocurrency community is building incredible financial technology, which is at the core of Bitcoin and many DeFi projects. Despite the new market structures being ubiquitous, there isn't one place that can fully control it.

But about finance, one strange thing is that it doesn't have a direct utility on its own. Before the sentiment of "institutions are coming," DeFi went through a slump, questioning the purpose of DeFi, why we are doing these trades, why we are building yield farming, why we are engaging in these cyclical, meaningless operations. Because this is actually financial technology, and finance itself does not have a direct use case; it's just an accounting system used to transfer representational assets. What truly matters is the actual goods and services in the physical world.

We all know how to build markets. I believe one of the most valuable things in the current industry is bringing more value onto the chain. The statistics Mert mentioned are very shocking; a single tweet can cause a value higher than the entire crypto market cap to fluctuate instantly. But what I'd like to add is that the entire crypto market cap is still less than Nvidia's market cap, and we all believe this situation won't last. We all believe that cryptocurrency technology will become a crucial pillar of the global financial system, but we still have a long way to go.

To achieve this goal, it's not just about solving technical issues like how to scale blockchain, how to build decentralized exchange platforms, but it's about bringing assets onto the chain, stablecoins being a good example. I think this is also the core of the decisions we make at Backpack because we can't pretend this world doesn't exist; countries have different rules, regulations, and assets, whether it's stocks in the US, municipal bonds, retirement accounts, currencies from around the world, or real estate. We need to bring this value onto the chain to breathe life into all the amazing things we've built over the past few years.

This kind of fusion is exactly the trend we are starting to see, and it is also the exciting reason for the imminent arrival of institutions. As the real world gradually merges with and accepts the crypto world, cryptocurrency will truly drive the upgrade of the financial system. Only by combining real-world assets and rules can we achieve this goal. This is some of the current development dynamics and what makes me excited.

The Dynamics of Bitcoin and Altcoin Season

Robbie:

I think you are absolutely right. The reason we want this value to enter the chain is not just because we have built these systems. Yes, we have indeed built them and hope to see people use them, but more importantly, they are actually better than traditional systems.

I often say that blockchain is the best existing coordination tool. This applies to robots, AI-driven economies, and human-driven economies. Typically, coordination involves risk management, collateralization, and the distribution of scarce resources. All of these can become more efficient, transparent, and visible through blockchain.

Currently, we are observing a macro-level safe haven phenomenon where funds flow to cash, bonds, gold, and then digital gold—Bitcoin. On the other hand, tech stocks represent another part of our industry, which includes Ethereum, Solana. Therefore, Bitcoin acts as a bridge at the intersection of these two worlds. We see cryptocurrency maturing, integrating with the traditional financial system, and a bridge forming between DeFi and the traditional financial world. Bitcoin is that bridge, and its dominance is rising.

In the past, these cycles have always passed through Bitcoin first and then expanded to other cryptocurrencies and the blockchain world. Will it be different this time? As institutions begin to adopt on-chain technology and value, will we bypass Bitcoin and see funds flowing directly to tech platforms like Ethereum, Solana, Monad, and all L1 and L2 solutions?

Andy: When will the alt season arrive?

Mert:

This is a complex question. Regarding whether altcoins like Solana need Bitcoin to lead the rebound to warm up or if they can operate independently, I personally believe they can operate independently, and there are several different perspectives to consider.

Firstly, from a historical perspective, over the past eight years, Bitcoin was supposed to become digital cash and a P2P payment system. Although functionalities like the Lightning Network mentioned in the whitepaper have not been fully realized, Bitcoin has become a solid digital gold alternative. Even the Treasury Secretary mentioned two days ago that Bitcoin has in some ways found market adaptability. Although Bitcoin is still a risk asset and has not completely decoupled from the market. A few days ago, everyone was asking why Bitcoin and cryptocurrency were decoupling from the market, but ten minutes later, a big drop happened.

My view is that the primary use case of cryptocurrency in the past has always been store of value, somewhat decoupled from the existing market's cash flow, perhaps to the tune of around 20%. However, if you look at upcoming stablecoins, payment integrations, and even on-chain listings, these all don't require Bitcoin; they work directly with tech companies.

In this scenario, I think this is probably their best shot ever to decouple somewhat. I don't think it's going to happen in this cycle; I think it's going to take a long time to really build that consensus. For instance, I was just in New York, and people there already know what Bitcoin is, but they'll ask me, why should I invest in Solana instead of Bitcoin or Ethereum. In their minds, Bitcoin is one thing and Ethereum and Solana are another.

This phenomenon seems to be happening. In terms of market cap, Solana is about a $550 billion market cap, which isn't that much. So it just takes a few relatively strong institutions operating on these chains, holding capital, to make them bounce. So I think Bitcoin doesn't necessarily need to lead the charge anymore because they're not the same thing. Although they're all blockchains, Bitcoin is something completely different.

Of course, you could say there are new L2s on Bitcoin, which is right, but I'm not sure how much those L2s benefit more than Bitcoin itself. And on the Ethereum side, it's the other way around - L2s might benefit slightly more than Ethereum itself.

Institutional Adoption of Cryptocurrency

Andy:

This is a very interesting paradox. Indeed, when institutions look at Solana, crypto participants might see the distinct advantages of Solana, which is also one of the reasons Ethereum has underperformed in the last 18 months.

If you're investing in Bitcoin, it is indeed the lowest-risk, best risk-reward ratio option, especially for allocation purposes. But if you want to allocate to a smart contract platform, buying into Ethereum during the past bull run may not have been the wisest choice as its market cap is already quite high, and Solana is faster, better, cheaper, and has more use cases in the current crypto iteration. For "meme," DeFi, and fast transactions, Solana is a winner.

Ethereum has indeed been in a quandary in the past 18 months, trying to figure its place out. However, institutions might be a great help to Ethereum and might trigger a price rebound for Ethereum.

We had a conversation with Arthur Hayes last night about Ethereum and all Layer 1 and smart contract platforms. Ethereum's current sentiment is indeed low, he predicts that after Bitcoin completes its rally, Ethereum will lead the next rebound. Institutions may see the potential of Ethereum and drive its adoption.

In the long term, institutions may consider it challenging for Ethereum to reach a $1.5 trillion market cap, while projects like Solana, Celestia, Hyperliquid, and others reaching a higher market cap seem more feasible. This view reflects the market's different perceptions of the potential and value of different blockchain projects.

Robbie:

From a technical perspective, helping institutions realize that they are still in the early stages of technology, but this technology is resilient. If they choose to adopt a certain L1, they are essentially gaining the entire ecosystem. Therefore, Mert, I think you pointed out the dynamics between the network and its Rollups, such as Bitcoin's Rollups currently providing more value than they receive from Bitcoin. Ethereum's Rollups are the same. Ultimately, these naturally occurring symbiotic relationships exist in reality. I'm not a fisherman, but the only fish I've caught is the kind that swims with sharks, it eats the little parasites off the shark, benefiting the shark, while the little fish also gets food. It's a very symbiotic relationship, and I believe this relationship can be achieved on-chain.

Regarding L1 and L2, we seem to have overlooked the realization of this relationship. So, Andy, your question is, why is this still a valuable investment for institutions? I think it's because they get the whole package. If someone buys Ethereum, they think they are getting Ethereum and all of its Rollups, possibly overlooking that these Rollups also have their own governance tokens.

From what I understand of institutional sentiment, when someone thinks of Ethereum, they think of all of Ethereum and its Rollups. This is entirely different from Bitcoin. I'm curious about your thoughts on Solana and its network extensions. I think this is more similar to the view of Ethereum and its ecosystem than to Bitcoin because when someone thinks of Solana, they think of Solana and all of its network extensions.

I have two questions: What is the sentiment around Solana and its network extensions? How do these network extensions and Solana's L1 ensure their symbiotic relationship?

Armani:

I want to get back to the core of this issue, which is related to the view that this issue is about the rebound led by Bitcoin, whether they can self-replace. I think this is very simple. Anyone can lead any rebound, it just depends on who has achieved product-market fit in a specific area.

The reality is, every project now is a Meme. Bitcoin is the first and only true Meme, in the purest sense. Therefore, it is a way of storing value. As long as everything is a Meme, Bitcoin will always be the value ceiling of all these cryptocurrencies.

When you analyze the relative value between Ethereum and Solana, you will find that Ethereum is already high, while the value of projects like Solana, Celestia, and others is relatively low. Obviously, investing in low-cap projects is more attractive because they have more room to grow compared to Bitcoin. The question is how to bypass Bitcoin and tell the story of the tremendous growth potential of Ethereum or another chain. The answer is simple: product-market fit and real-world use cases. I think this has to be the story of any smart contract platform.

In fact, it only takes one company, one use case, or one protocol to reach escape velocity. This is why I am optimistic about any founder daring to create an L1, because you only need one application, one 'Instagram moment,' or one 'Uniswap moment' to create the growth you need. We can say we are still in the early stages, but the reality is, if you want to achieve that kind of breakthrough growth, I think the key is whether you have a global use case that everyone is using, whether it's institutional DeFi, stablecoins, or anything else. But ultimately, it all comes down to product-market fit, and that is not surprising.

Recommendation of Solana to Institutions

Andy: I think the concept of network scalability may not be directly relevant to our current discussion. I believe the main reason for recommending Solana to institutions is its advantage in global data synchronization and high-speed transmission. Mert, have you recently had in-depth discussions with institutions about Solana and Helios? What aspects of what you said are they particularly interested in, or what do they not quite understand? What has been their reaction?

Mert:

Of course, there are several angles. First, it depends on the institution's own capabilities, but fundamentally, they want to be able to efficiently move funds from point A to point B, or achieve certain functionalities. If it is a fintech platform like Robinhood, they may want to attract a new user base or expand in the market, such as entering the prediction market. Therefore, they often express their desire to work with stablecoins or real-world assets (RWA), or they are themselves more innovative fintech companies, such as Klarna or Robinhood, or a fintech company in the US or Brazil.

In the case of asset issuance, they usually adopt a multi-chain strategy. From what I have observed, for example in the case of BlackRock, they clearly do not rely solely on Ethereum but choose a multi-chain strategy. The issuer behind it, Securitize, has just announced an expansion to Solana, and this is not the first time. Companies like Visa, PayPal, Mastercard, Stripe, Google, among others, are basically not willing to risk investing only on one chain because the risk is too high for them. Therefore, they usually focus on the top two or three chains, usually Solana and Ethereum. You can also see these institutional investors, such as Evan Echo, Franklin Templeton, whose portfolios usually include Bitcoin, followed by Solana and Ethereum, possibly with some niche projects.

For these institutions, the smooth operation of the product is key. They need compliance control, predictable and stable fee payments, and security. This is usually their main focus. In addition, there are some more "Web 2.5" companies that are more concerned about who can attract them. In my view, as long as you have an excellent B2B sales team, you can successfully partner with them. You can see a lot of transactions like this with companies like Ripple, Stellar, and others. If you look at their team structure, it is usually 60 business developers to 1 engineer.

This is a mix, but ultimately, technology is key. If the product is not good, users simply won't use it. Therefore, for those institutions, I think there is some asymmetrical upside, which is also why Base is important for Ethereum because they have an excellent B2B team. They know how to sell, which is why Solana has a team like Helius, who has done a lot of work in governance and recently hired a Chief Business Officer from Jane Street.

When I talk about business development, I mean actual talent. However, the point Armani made is indeed interesting. In a world where everything is a meme, Bitcoin is clearly the ceiling. Although it is not a pure meme, making it work requires a lot of social elements.

If we accept the premise that these chains are more like tech stocks, whether L1 or other chains, people will actually start paying attention to some traditional factors, such as how much money a chain can make. As a shareholder of this chain, assuming I am a token holder, can I actually make a return from it? For example, if I stake on Ethereum or Solana, what happens? Can I really earn money? These questions become very important.

The discussion of Solana's SIMD-228 proposal is also a good example. This proposal essentially suggests a significant reduction in on-chain issuance. However, the opposition from the Solana Foundation and some institutions is that they actually like the high staking rewards, even if it comes from issuance, such as 8% to 9% yield.

This is why I like Rev. While some people may not like it, it is at least a relatively good metric, especially compared to those easily falsifiable metrics. Rev is relatively hard to falsify, especially when it persists. It is not only a proxy for demand but also a proxy for economic rewards flowing to users in the network. Therefore, you can begin to focus on some fundamentals. This may take some time, which may also be related to network scalability.

In my view, when people are launching L2 on Solana, although there is not a huge difference, the implementation is different due to the distinct architecture. It might be used for storage or a so-called optimistic rollup, where you may only launch it for a specific task, execute the operation, and then roll back.

The biggest difference is that Solana's L1 is not shared. It is essentially about improving BMS and reducing latency. We do not care what you do in this block space; instead, we care about how many operations you can carry out on this platform as much as possible because there is a clear economic and technical incentive for users in the network. Therefore, such a design is very reasonable.

In some application scenarios, imperfect technology is also acceptable. You can choose to develop an algorithm leveraging assets on L1. The main advantage of L2 is building upon an existing valuable ecosystem on L1, which is also what makes Bitcoin L2 attractive because Bitcoin itself is very valuable. Ethereum is the same; it has a lot of assets on L1, rather than just scaling L1. Ethereum actually supports L2 development by adjusting L1, forming a rollup-centric pattern.

However, it is important to note that even with a rollup-centric approach, rollups still need to work with L1, and L1 cannot be neglected, which may be the root of many issues. If L1 can be well maintained, in the long run, other issues will be resolved. Even in a case like Ethereum, after a long enough time, viable alternatives will emerge, such as those who are unwilling to use Celestia can choose to use sovereign rollup or similar technologies. At that point, incentive mechanisms and economic foundations may become blurred. Regarding network scalability, I believe the biggest difference between Solana and other ecosystems is that Solana's core focuses on its own development, while other ecosystems may adjust solutions so that rollup can benefit from it. Therefore, Solana is more resolute in its stance.

Backpack Theory

Andy:

I believe we are fundamentally aligned on the concept of "bias-free design." As I pondered the dynamics of BTC, I found that the technical design also directly focuses on a singular trade-off and seeks to maximize it. The market has consistently viewed this as a factor that enhances user experience and the overall appeal of the Soul token, while also being used in the utilization and construction of the Savannah chain. Although I am somewhat tired of the dot funds and feel that it may be a bit overdone, we can discuss this later.

Interestingly, this aligns with what Armani is doing in Backpack and the content Mert mentioned. The Solana ecosystem seems to be growing in a super app-like manner. When thinking about the concept of the best products in the crypto space, many people think of wallets, exchanges, stablecoins, and some form of hybrid of these, whether on their own chain or on a fast, low-cost chain like Solana. Jupiter is evidently Solana's primary exchange, but recently, Pump actually migrated from Radium to Pump Swap. Jupiter has added a different product suite, and Camino has just added an aggregator on their platform.

Therefore, we are entering a world of the Solana ecosystem, where it feels like many competitors are vying to become super apps. I am curious about what the Backpack theory is, why you are building this platform, giving you the power of end-user distribution. At the wallet level, you can guide users to the exchange, where they can trade, earn fees, and use those fees for buybacks and other financial incentives. How do you view the acceleration of this flywheel effect?

Armani:

The Backpack Theory is somewhat counterintuitive, especially for those who have a deep understanding of the crypto space. I previously mentioned a perspective: the total value of the entire crypto space is still less than Nvidia's market cap. I believe that the future of this industry has two possibilities.

One possibility is that we basically remain in the current state, still being an unregulated offshore speculative gambling. Since the main use case is on-chain trading of some assets that have no real value, this can also be a good business. Gambling as a form of consumption can bring joy or sadness to people, depending on individual views on gambling. But gambling is indeed a real thing, and this may be where we are confined.

I don't think anyone among us would believe in this possibility. If that were true, the four of us might all choose to pivot our businesses to AI or another field. Personally, I believe that crypto, finance, and technology will deeply permeate the financial industry, closely intertwined with every major financial institution globally. Regardless of which country you're from, what religion you believe in, or what political stance you hold, eventually, we can all leverage these trust-minimized computers for transactions and value exchange on a global scale.

Next, you might wonder, in a world where trillions of dollars in traditional finance have been tokenized and traded on-chain, what companies and protocols would you build. I believe there will ultimately be two types of attributes.

Either fully decentralized, completely censorship-resistant, representing the best of what this space has to offer, such as Uniswap, Ethereum, Solana, and more. They are geographically diverse, attracting a large participant base. Everyone is using them, but no one owns them, so the concept of compliance is like an undefined problem, just like dividing by zero, it doesn't make any sense. For example, how can the U.S. enforce compliance rules when some servers are running in China, where China's compliance rules are completely opposite to those of the U.S., or in scenarios in the UAE, Africa, South America, among others.

This is the concept of censorship resistance. I use the Pacific Ocean as an analogy: the Pacific Ocean is a powerful medium of exchange. The U.S. can send ships and containers to Japan, Taiwan can send goods to the U.S., China can trade with Japan, and nobody would think that any one country would suddenly sink a ship because it controls a certain area of the sea. The Pacific Ocean is effective because nobody controls it. This uncontrolled state creates astonishing human coordination.

Therefore, I believe blockchain is like these new natural mediums, existing in our financial transactional ecosystem. Censorship resistance is a very clear and crucial attribute. If we want this industry to truly matter in everyday life, compliance is also a very important attribute.

If you are centralized, controlling something, able to shut down a system, or control people's funds, even reorder their transactions, shut down matching engines, and so forth, then you must have a presence in a country with a government, laws, and military. You must abide by that country's rules and regulations.

That might sound simple, especially to those outside the crypto space. Laws and rules exist, but I believe most people don't truly comprehend this, especially those deeply familiar with crypto, because we've grown up in an industry without clear rules. Hence, we've been professionally trained with this counterproductive mindset that rules are irrelevant, and everything is fake.

In fact, all of these have consequences. If you provide services to North Korea, you may end up in jail, these events all have real consequences. Therefore, I believe compliance is another very important factor. If you want trillions of dollars worth of value to operate on-chain, and this value is rooted in real life, such as Apple being in California, you must follow all the rules there. So, you must have one of these two attributes: either be censorship-resistant, or be compliant. Anything in between has no way out. I firmly believe in this.

Therefore, Backpack's theory is that, in reality, not many crypto-native people would choose the compliant path. Many great builders, such as Uniswap, Jupiter, etc., are building excellent censorship-resistant technologies. And there are not many who truly care about what we are building here and want to establish a crypto-native financial version. This is exactly the direction we are trying to position ourselves, and we can contribute great products to the broader crypto ecosystem. I think this is the moral background on which we are building the company in this way.

Backpack's Super App Strategy

Andy: In terms of actually implementing the compliance vision or effectively opening up technology to new audiences, what is your strategy?

Armani:

There are several key points. I think for us, the most important thing is liquidity, because once you have liquidity, everything else will follow. Platforms like these are liquidity hubs, you are not just connected to one chain, but connected to every chain. And you are not just connected to every chain, but also connected to fiat on/off ramps in every country. In fact, this is a very special product, sitting between two economies: one side being the traditional economy, i.e., the traditional banking system, and the other side being the crypto economy. So, if you want to achieve what we want to achieve, the primary goal is to climb this mountain of liquidity. Because once you are able to establish and tap into this pool of liquidity, whether you are in smart contract trading, holding spot assets, or in fiat on/off ramps, you can leverage this position to build great products.

You might ask, for example, how do you build a stablecoin? Undoubtedly, all major stablecoins have a centralized exchange platform, such as USDC on Coinbase, USDT on Bitfinex, this is not surprising. Stablecoins are the first example of real-world assets, even if Circle does not consider itself a centralized exchange, but for all practical purposes, they are effectively a centralized exchange. You deposit tokens on a chain, whether it's Solana or Ethereum, and then you can withdraw into fiat or other assets. You are essentially converting one currency to another. You are wrapping assets, that's an exchange platform. This liquidity allows them to obtain the distribution of USDC and has actually created one of the most important products in the industry today.

I believe we will see more and more Real World Assets (RWA) come into play over time. You might ask, with so many RWA companies being created, why hasn't one succeeded? Why aren't we all using tokenized securities on-chain now? Because there hasn't been that element of distribution. There hasn't been someone contributing to RWAs like Coinbase did for Circle.

So the primary goal is to drive that pool of liquidity, to build a very deep trading platform. Because from there, everything else will follow. Then you can start talking about wallet tech, real-world assets, remittances and payments, and many other exciting use cases. But it all starts with the trading platform, it starts with the liquidity.

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