Tokenized Stocks and Global Liquidity with Armani Ferrante CEO of Backpack | EP 169
Summary
Armani Ferrante sees tokenized equities as the opening wedge for moving the entire economy onto blockchain rails. Stablecoins supplied the dollars, scalable chains supplied the infrastructure, and regulation is now beginning to connect those rails to real assets. Asked to imagine five or 10 years from now, he says the entire U.S. stock market will probably be tokenized; “then you concede the entire economy”: fixed income, options, IPOs, private placements, venture capital, and real estate.
Backpack Securities is designed to combine a freely transferable token with one-to-one backing by and redemption for an actual share. Unlike cash-settled wrappers, every token requires a real share to be purchased and can move between traditional brokerages and Solana. That redeemability lets arbitrageurs buy on Nasdaq or NYSE and sell on-chain, or reverse the trade, which Ferrante says produces pricing “40X, 45X” better than comparable stocks on Robinhood Chain.
Ferrante treats regulation as product infrastructure rather than a compliance badge. He says Backpack probably lost $100 million to $200 million in foregone profit last year by blocking prohibited users instead of allowing VPN access, while spending years building licensed operations in Japan, Europe, Dubai, and working toward the U.S. The objective is “not Backpack US, not Backpack International—you just have Backpack”: one globally regulated clearing, matching, and settlement layer with unified liquidity.
The Payward–Hyperliquid relationship offers a blueprint for connecting crypto technology to regulated derivatives markets. Hyperliquid can remain an 11-person technology provider while Payward, Kraken’s regulated operator, handles KYC, surveillance, orderly markets, and the DCO, DCM, and FCM obligations required in the U.S. Ferrante calls the arrangement “one of the most important announcements in crypto this year” because it shows regulated exchanges can amplify DeFi without forcing small protocol teams to become full financial institutions.
Tokenizing the back end may matter as much as putting tradable shares into DeFi. Brokerages currently maintain multiple intermediaries, ledgers, margin accounts, and millions of dollars of idle bank cash to accommodate T+1 or T+2 settlement and customer flows. Ferrante expects tokenized DTCC or transfer-agent records plus stablecoins to enable instant movement among brokers, clearing firms, transfer agents, and DeFi—“putting a brand-new engine into an old car” that could expand the space 10X or 100X.
Backpack’s competitive thesis is a last-mover advantage built from avoiding incumbents’ technical and compliance debt. Binance, Coinbase, Robinhood, Kraken, and Backpack may each anchor different tokenized-asset ecosystems, with Backpack concentrating on Solana. Ferrante concedes Backpack is not yet at the incumbents’ level and that there is “a lot to prove,” but expects it can compete head-to-head within one or two years if it keeps building the product and doing the hard things.
Backpack’s BP tokenomics explicitly reject the industry’s TGE-as-exit model. Users received 25% at TGE, another 37.5% is reserved for growth tied to major product or geographic milestones, and the final 37.5% sits in the corporate treasury until one year after an IPO or other equity event—which may never occur. Insiders bought equity rather than token warrants, while contributing token holders can earn an option to convert BP into reserved company equity through a binding legal structure: “People should only make money if you achieve your goals.”
Deep dive
1. Stablecoins completed the foundation for real assets to move on-chain
Ferrante describes crypto’s first decade as sequential “bricks”: Bitcoin introduced the blockchain primitive; smart contracts made it programmable; Solana and similar systems addressed throughput and scaling; and wallets, DEXs, users, and applications supplied a functioning market structure.
DeFi then encountered a basic constraint: assets need to be quoted and priced, as well as a unit of account. Stablecoins took years to bootstrap, but Diego’s formulation captured the acceleration ahead: “Dollars might have taken a long time, but once you have dollars, everything else follows way more quickly.”
Crypto-native cash-flow assets remain scarce despite businesses such as Hyperliquid buying and burning tokens. The stock market, by contrast, already contains “all the great businesses,” so tokenization brings established assets and cash flows into infrastructure crypto spent a decade building.
Logan’s sizing point makes the runway tangible: even a 1,000X increase in today’s tokenized equities would represent only about 6% of all global equities in the U.S. capital markets—not all capital markets. Ferrante’s analogy is access to water shifting from a guarded building to “a river” or a household faucet.
Ferrante also points to 24/7 markets, instant settlement, real-time collateral, and value moving seamlessly across the world as the eventual global financial substrate. He says the CLARITY Act effort and SEC and CFTC activity show the regulatory layer beginning to converge with the technology and market infrastructure.
2. Tokenized stocks span direct ownership, ledger claims, and synthetic exposure
At one end, the transfer-agent model places ownership directly on a company’s official register—arguably more directly than holding through E*TRADE or Fidelity. Its weakness is distribution: issuers may use different agents, and the closed-loop tokens still require KYC, wallet whitelisting, and designated venues.
DTCC’s model similarly tokenizes the central ledger and creates a security entitlement tied to bona fide stock, but at the intermediary layer connecting virtually every U.S. brokerage to transfer agents. Ferrante stresses DTCC’s historical role: electronic markets required a common database for ownership, broker settlement, and margin accounts.
Neither structure currently behaves like USDC: the asset cannot freely enter Aave, Kamino, or a DEX. That limits composability even though Ferrante considers DTCC, Equiniti, and other transfer-agent initiatives essential to rebuilding financial-market infrastructure.
At the opposite end are debt-security wrappers associated with Robinhood and Kraken: a separate security tracks stock economics and may be backed by shares, but holders do not own the underlying directly. The token flows freely, yet minting fees, redemption constraints, isolated liquidity, and cash settlement make it “more akin” to a derivative.
3. Backpack’s redeemable-share model turns arbitrage into liquidity
Backpack aimed for “the best of both worlds”: a Solana token that moves like a stablecoin but cannot exist unless an actual share is purchased one-for-one. Ferrante’s test is deliberately intuitive: “Can I transfer it to and from my brokerage account?”
His proposed experience resembles moving USDC through Coinbase. A user could fund a Backpack brokerage, on-ramp Tesla stock from Robinhood, withdraw the token to Solana, and reverse the route; he also cites buying SpaceX on Solana and transferring it into Robinhood like a wire transfer.
The structural advantage is access to underlying price discovery. Traders can buy on Nasdaq or NYSE and sell on Solana when the on-chain asset trades rich, or buy on-chain and move inventory back when it trades cheap, continuously pulling prices toward the NBBO.
Ferrante says Backpack Securities offers “40X, 45X” better pricing than comparable stocks on Robinhood Chain and trades much tighter and closer to the NBBO. He does not attribute the whole difference to Solana’s deeper DeFi; similar volume, pricing, and liquidity differences appear among tokenized-stock products on Solana itself.
4. Tokenized ledgers could replace idle cash and delayed settlement
Today’s brokerage stack includes introducing, executing, and clearing brokers ultimately settling against DTCC, with the transfer agent beneath it. Across those intermediaries are ledgers and assets creating float, liquidity, and margin accounts to manage risk.
Ferrante’s operational frustration is the “millions of dollars sitting in cash and doing absolutely nothing” while firms accommodate T+1 or T+2 settlement, customer inflows, and outflows that lag stablecoin movement.
Tokenized DTCC and transfer-agent records could let brokerages replace idle bank balances with stablecoins and move settled shares instantly among brokers, agents, clearing firms, and DeFi. He expects this hidden plumbing to “10X or 100X the entire space.”
The immediate products may look less transformative than freely tradable on-chain shares, but Ferrante compares their eventual impact to “putting a brand-new engine into an old car”: a back-end replacement that supercharges every interface above it.
5. Backpack spent near-term profit to pursue one global marketplace
Ferrante says Backpack may be the only post-FTX exchange that did not open globally on day one or permit U.S. users to enter through VPNs. He estimates that decision cost it $100 million to $200 million in foregone profit during the prior year.
The bet, made in 2023, was that DeFi and CeFi would ultimately collapse into “just finance.” Ferrante moved to Tokyo three or four years ago to build locally, work with the FSA, obtain a Japanese bank account, and integrate directly rather than through intermediaries.
Backpack repeated the process across Europe and the UAE, securing licensing from Dubai while working toward the U.S. Ferrante rejects the familiar patchwork of Binance, Binance US, and Binance Japan: separate URLs, products, and liquidity profiles prevent genuine global aggregation.
The destination is “a unified clearing, matching, and settlement layer for global liquidity,” covering Solana assets, stocks on ICE and Nasdaq, options, and prediction markets. Licensing matters because tokenizing real assets requires KYC and, at minimum, an introducing broker; in the U.S., it also requires a clearing broker and related custody, clearing, and settlement infrastructure—not merely legal permission.
6. Hyperliquid and Payward reveal the regulated-DeFi division of labor
Ferrante views Hyperliquid as the fastest-growing exchange and project in crypto over the past cycle, with an L1 and derivatives exchange whose token is “probably” the best trade in crypto history. Derivatives retain regulatory overhang because a risk engine, liquidations, collateral haircuts, auto-deleveraging, insurance funds, and backstops cannot simply be decentralized away.
Entering the U.S. means satisfying the CFTC’s established principles through DCO, DCM, and FCM infrastructure. Ferrante says the burden of acquiring and operating those licenses is “like building a whole other Hyperliquid” solely for regulatory operations, and says only a handful of firms can play that role.
The Payward arrangement lets Hyperliquid remain an 11-person technology-services provider while Kraken’s operator creates the regulated exchange, performs KYC and transaction monitoring, surveils markets, and maintains the fairness and integrity expected of CME, ICE, or Nasdaq.
Ferrante admires the choice to build “the most efficient business that can possibly be built,” rather than maximize organizational size or revenue. Backpack wants to play the corresponding role for Solana across stocks, perpetuals, options, dated futures, securities venues, and its wallet.
7. The regulatory moat comes with real execution risk
Logan’s challenge is scale: Backpack remains small beside Robinhood, Coinbase, Binance, and Kraken. Ferrante frames competition partly by ecosystem—bStocks backing BNB Chain, Coinbase stocks backing Base, Robinhood stocks backing Robinhood Chain, Kraken’s xStocks spanning chains, and Backpack concentrating on Solana.
Ferrante calls Backpack’s clean start a “last-mover advantage.” Older offshore exchanges accumulated technical and compliance debt, then discovered that an international product could not simply be imported into Japan, Europe, or the U.S.; each license instead produced another fragmented venue.
He is explicit about the gap: “We are not so blind and overly confident as to believe that we are at that level at the moment.” His conditional prediction is that Backpack can compete head-to-head with the largest players in one or two years, but its markets must still prove greater fairness, transparency, and integrity.
8. Backpack treats a TGE as network formation, not an insider exit
Ferrante contrasts an IPO—typically earned after a company has built something consequential—with crypto’s TGE pattern. A token should begin the network, enabling contributors to share in value creation much as early Uber drivers arguably should have shared in the platform’s upside.
Instead, Polymarket FDVs, pre-market perps, institutional farmers, exchange listings, and the industry’s marketing attention and dollars can produce a launch-day spike that slowly bleeds out. Ferrante says this model is bad for users, token buyers, exchanges, and the industry.
His categorical design principle is that “no founder, no team, no executive, no investor” should profit from an “artificial, fake TGE moment.” Like a Silicon Valley founder, an insider should get rich only after contributing “a pillar to the world’s economy”; failure can mean receiving nothing.
Backpack says it did not pay for exchange listings or market makers or try to artificially pump the price into a fake valuation. Ferrante argues that market price cannot ultimately be faked, so the token was engineered for long-term growth rather than to peak on launch day.
9. BP’s allocations tie dilution and insider liquidity to milestones
BP’s first bucket put 25% of supply directly into users’ hands at TGE. A second 37.5% is reserved for growth when Backpack opens meaningful regions or products—events Ferrante believes can add users and revenue enough to justify dilution.
The remaining 37.5% is locked in the corporate treasury until one year after an IPO or other equity event. If Backpack never reaches such an event, that allocation may never unlock; Ferrante refuses to invent an IPO date when “there are a lot of steps between here and now.”
Backpack never sold token warrants, despite investor demand for their earlier liquidity and valuation premium. Founders, employees, executives, directors, and investors instead share exposure through the company, with “no side channel” or foundation allocation quietly providing insiders TGE liquidity.
BP holders who stake and contribute to the network and product can earn an option to convert their tokens into equity reserved for contributors. Ferrante’s closing proof point is mundane by traditional-finance standards but unusual in crypto: the promise is enforced through a painstakingly prepared, binding legal structure—“There’s a legal document.”