In the Eastern Eight Time Zone this week, Backpack Exchange announced its token economic model, attracting industry attention. Unlike mainstream exchanges that typically reserve large shares for teams and investors first, then cash out through linear unlocking, Backpack focuses on "preventing insiders from dumping on retail investors": the founding team and institutions will not receive direct tokens but will share token-related profits indirectly through company equity. This rare design integrates the equity incentive model of traditional tech companies into exchange tokens, postponing the profits of insiders who could "get rich first" to a later time point with higher thresholds. The core question that follows is a long-standing dilemma in the industry: should exchange tokens serve internal incentives or prioritize protecting retail investors, and how to redraw the line between the two.
Founders Reject Getting Rich First: Token Wealth Transforms from "Founder Dividend" to "Product Dividend"
● Founder Armani Ferrante emphasized in a public statement, "Before the product achieves escape velocity, no founder, executive, employee, or venture capitalist should gain wealth through tokens." This statement sets the timeline directly after "the product truly runs smoothly," denying the legitimacy of getting rich through tokens based on stories or expectations, and assuring the market that insiders will not stand on the other side of the transaction against ordinary users before the business has formed self-driven growth.
● In stark contrast, traditional exchanges often start their token issuance with a large pre-allocation for teams and VCs, supplemented by early unlocking and long-term linear releases, allowing insiders to hold considerable chips early in the liquidity formation. Once market sentiment weakens or valuations become too high, original holders tend to cash out, and this "get rich first logic" has repeatedly played out through several bull and bear cycles, becoming an industry default practice, which also leaves exchange tokens with a persistent "high-position dumping channel" stigma in the eyes of retail investors.
● Armani's statement directly addresses the emotional shadows accumulated by retail investors over the years—stories of project parties dumping at high positions and VCs distributing at the top are endless. By publicly denying that insiders can get rich first through tokens, Backpack is not only striving for a trust premium for its own tokens but also attempting to reconstruct power relations at the narrative level: the benefits of token price increases should be enjoyed more by external holders who bear real market risks, rather than being a predetermined revenue item written into insiders' financial budgets.
Team Receives No Direct Token Distribution: Binding Tokens to Company Fate with Equity
● According to public information, the Backpack team, founders, and investors will not receive direct token allocations, but will indirectly enjoy economic rights linked to tokens through holding company equity. In other words, insiders hold the "parent asset" of the company, and the value changes of the tokens will feedback into the company valuation through a preset mechanism, thus structurally cutting off the channel of "cashing out just by holding tokens."
● In this design, tokens and equity are bound into a tighter union: the better the token performs, the higher the company valuation, and the more valuable the insiders' equity becomes; and vice versa. This path of equity carrying token rights forces management to focus on the platform's long-term competitiveness rather than short-term price fluctuations, because only when the platform moves towards larger scale, profitability, and more robust cash flow will the intrinsic value of equity amplify, allowing insiders to truly realize returns.
● For internal decision-making incentives, this means shifting from "how to tell a good token price story" to "how to grow the platform's fundamentals." Short-term price manipulation becomes a risk for insiders: a high price without corresponding business growth will erode the company's future valuation base, thereby suppressing equity value. In contrast, directing resources towards product iteration, compliance pathways, user growth, and other areas that can elevate long-term valuation aligns with the rational choices of equity holders, structurally weakening the impulse to treat tokens as chips.
No Unlocking Before IPO: The Time Gap Between Retail Investors and Insiders is Extended
● Research briefs indicate that team-related tokens will not unlock before the company's U.S. IPO, which is the second key gate in the Backpack model. Even if insiders indirectly enjoy token rights through equity, the corresponding tokens remain locked before the IPO and do not enter the circulating pool, thus preventing explicit selling pressure in the secondary market. This clause anchors the timing for insiders to realize profits at a more traditional and high-threshold event node.
● Binding the unlocking timing to the U.S. IPO essentially extends the project's time dimension to the scale of traditional capital markets: meeting IPO requirements means a whole set of hard indicators such as compliance structure, financial transparency, and sustained profitability must be passed. For an internet trading platform with tokens as one of its core assets, this design effectively writes "must adhere to long-termism" constraints at the institutional level, compressing the space for short-term valuation bubble chasing.
● For retail investors, the team's tokens not unlocking before the IPO can indeed delay the emergence of large-scale selling pressure across multiple market cycles, buffering the common expectation of "unlocking dump." However, at the same time, the risk shifts to the other end: the IPO timetable and success probability are highly uncertain; macro environment, regulatory attitudes, and industry prosperity will all influence whether the listing can ultimately happen. If the IPO process is delayed or even stalled, how to handle the locked internal rights and whether to restart the game will become new variables in the future.
Speaking in a Weak Market: Backpack Treats Narrative as a Counterwind Chip
● Research briefs point out that the current overall crypto market is weak; although Bitcoin has rebounded, its price has only risen to around $69,000, not returning to the emotionally heated high range. Amid macro uncertainty and regulatory pressure, market funds are more cautious, and risk appetite is significantly lower than during the previous frenzy, making the window for projects to quickly raise funds through "issuing tokens + telling stories" significantly narrower.
● Concurrently, crypto-related assets in traditional capital markets are also not strong. For example, MSTR, which has a very high crypto exposure, has seen its stock price recently drop by about 6.6%, signaling a cooling interest from traditional funds in crypto risk assets. The pressure on secondary market valuations means that the narratives linked to them will also be tagged with discount labels; whether on-chain protocols or exchange platforms, they all face the reality of "telling stories becoming increasingly difficult."
● In such a weak market environment, Backpack's choice to introduce the design of "insiders not taking tokens first" appears more like a brand bet against the wind: in a phase where liquidity is insufficient and pure speculation is ineffective, reinforcing the stance of standing on the same side as retail investors aims for trust premium rather than short-term chip premium. If issuing tokens in a bull market relies on speed and imagination, then in the current environment, Backpack is clearly betting on a more institutional and contractual differentiated competition.
If Followed by the Industry: Token Issuance Rules May Welcome a Paradigm Shift
● If Backpack's model of "equity carrying token rights, insiders not directly holding tokens" is replicated by more exchanges, the first to be shaken will be the long-standing token issuance paradigm: from teams and VCs taking the lion's share, early unlocking, and selling at price peaks, to needing to realize profits through company valuation increases. Exchange tokens will transform from financial tools for insiders into a part of the overall company value, and the relationship between tokens and equity will shift from parallel to deep coupling, forcing a rewrite of the industry's incentive structure.
● When the protection of retail investors and internal incentives are rebalanced at the institutional level, the valuation logic and discount models will also have to adjust. Previously, the market habitually applied a discount for "project parties unlocking selling pressure" in valuations to compensate for potential selling pressure risks; however, if the team cannot unlock direct tokens in the long term, that risk factor will weaken, and more weight will return to the real business data, fee income, user stickiness, and other fundamental variables of the exchange. Token pricing will shift from "unlocking game" to "cash flow and network effect discounting," representing a forced upgrade of research methods.
● Furthermore, if this model is implemented in a broader range of projects, it may push tokens back from being "cash-out tools for insiders" to the origin of "product growth levers." If project parties cannot easily extract token liquidity, they will be more motivated to design tokens as tools to drive product usage, enhance network effects, and amplify user behavior value, rather than merely as fundraising media. For the entire industry, this means a collective re-examination of the "function of tokens" at the narrative level, moving closer to a mixed form of internet equity and user incentives.
Seeking a New Contract Between IPO and Tokens
Backpack attempts to reshape the profit distribution relationship between insiders and retail investors at the institutional level through the combination of "no unlocking before IPO" and "equity linked to token rights": insiders no longer cash out on tokens first based on inherent chip advantages but are forced to bind their returns deeply with the platform's long-term fate, pressing their own returns to the moment when the company truly creates value. This arrangement appears particularly radical in the current logic of exchange token issuance, thus garnering attention beyond the project's own scale.
However, it must be emphasized that there are still significant gaps in publicly available information regarding the total amount of Backpack tokens, specific allocation ratios, detailed unlocking schedules, and other key parameters; research briefs also clearly mark these relevant figures as prohibited from fabrication and pending verification. Without these hard data, external investors find it challenging to conduct complete valuation modeling for the tokens and cannot accurately assess the relative weight of different participants in the token economy in the future, which will become key points of observation and potential sources of controversy.
A larger question lies in the attitudes of regulators and traditional capital markets: whether the U.S. IPO can be successfully realized, how regulatory agencies view the model of publicly listed companies highly coupled with tokens, and whether institutional investors are willing to pay a premium for this new incentive structure will directly determine whether this experiment can extend beyond Backpack itself and evolve into a replicable industry paradigm. Finding a new contractual framework between tokens and IPOs may just be the first step; the real test is whether this set of contracts can stand firm in a more stringent traditional financial environment.
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