Backpack CEO's Reflection on Extreme Market Conditions: Learning from the FTX Crash, Backpack has a robust and transparent risk management system in place to protect users

On April 10th, the CEO of Backpack, Armani Ferrante, posted on social media that due to the market turmoil of the past week, the system load of Backpack has reached an all-time high. The team is continuously working hard to scale up in order to meet the growing demands of their user base. So far, the risk engine of the platform has performed well and will continue to be stress-tested by the market as the business develops. Although he cannot guarantee that it will be flawless, he believes that it will become one of the most critical parts of the Backpack system. As a former software development engineer at Alameda Research, Armani made a rare mention of the failure of FTX this time, pointing out that the collapse of FTX has educated the market - both risk management and custody are equally important. Learning from the collapse of FTX, Backpack attaches great importance to building a robust and transparent risk management system to ensure the security of user funds. Backpack does not operate its own market maker and has no incentive to liquidate users. It prioritizes fair liquidation on the order book (99.82% of liquidations are done directly on the order book), allowing any market participant to trade fairly. Furthermore, Armani also explained Backpack's three-step liquidation process (order book liquidation, backup liquidity support, automatic deleveraging) and reduces market impact through phased liquidation, price protection bands, and other measures to protect users from unfair liquidation.