Why Did BP Suddenly Rise? Backpack is Gaining a New Valuation Logic

TL;DR
· According to Cowlpane citing data from Crypto Briefing, Backpack accounts for only about 5% of the supply of tokenized stocks on Solana, yet contributes approximately 73% of the DEX trading volume at the issuer level.
· The key behind this is not the number of assets, but the proprietary automated market maker (propAMM) model adopted by Backpack. This type of liquidity pool is funded by professional market makers, aiming to create deeper order books and narrower bid-ask spreads.
· During certain statistical periods, propAMM contributed about 71% of Backpack's trading volume, indicating a significant concentration of liquidity in the tokenized stock market.
· Popular assets like SpaceX and Micron contribute a large volume of trades, which also means that Backpack's current trading activity still heavily relies on a few flagship assets.
· Compared to ordinary crypto tokens, some tokenized stocks also offer redemption mechanisms, creating arbitrage and price anchoring between on-chain prices and underlying asset values, which may become another key factor in attracting liquidity.

Tokenized stocks are rapidly transitioning from the "assets on-chain" narrative to competing in a more traditional market structure.

In the past two years, the industry's focus has often been on how many stocks can be tokenized, how many companies are covered, and on which blockchains they are issued. However, as more products emerge, a new question arises: after issuance, where can they actually be traded?

Data from Backpack provides a noteworthy sample.

According to Cowlpane citing data from Crypto Briefing, Backpack Securities accounts for only about 5% of the token supply in the Solana tokenized stock market, yet it handles approximately 73% of the DEX trading volume at the issuer level.

In other words, it is not the platform with the most issued assets, yet it attracts most of the trading.

What this reflects may not be the ability to issue tokens, but rather a more traditional financial market issue—liquidity.

5% Supply, Why Can It Achieve 73% Trading Volume?

For traders, whether an asset "exists" is not the most important factor.

What truly affects the trading experience is whether the order book is deep enough, whether the bid-ask spread is narrow enough, and whether a large trade will significantly push the price.

Backpack's advantage mainly comes from the Sunrise liquidity protocol and a model known as propAMM (proprietary automated market maker).

Traditional DeFi AMMs usually allow any user to provide funds to the liquidity pool, with algorithms quoting based on the asset ratios in the pool. In contrast, propAMM is closer to professional market making: funds and quotes are centrally managed by specific liquidity providers to enhance capital efficiency and provide deeper liquidity and tighter spreads whenever possible.

According to the data cited in the original text, during certain statistical periods, propAMM contributed about 71% of Backpack's trading volume.

This creates a typical positive feedback loop of liquidity: deeper liquidity → lower slippage and trading costs → more traders enter → trading volume further concentrates → market making efficiency continues to improve.

This is why Backpack, despite only occupying a small share of the token supply, can achieve trading volumes far exceeding its supply share.

This is particularly important for tokenized stocks. Because stocks already exist in mature traditional trading markets. If the on-chain version has significantly larger spreads and noticeably worse liquidity, then "going on-chain" itself is not sufficient to entice traders to migrate.

Truly competitive products ultimately need to solve a problem that traditional exchanges have been addressing for decades: how to enable buyers and sellers to transact at the lowest possible cost.

SpaceX as a Traffic Center, but Concentration is Also a Risk

Backpack's current trading volume is not evenly distributed across all stock tokens. The most typical example is SPCX, which represents exposure to SpaceX equity.

According to the original data, SPCX once accounted for the vast majority of DEX trading volume for SpaceX-related tokenized assets on Solana; the tokenized product of Micron Technology (MU) also gained a very high share of similar asset trading volume.

This indicates that once a platform has both popular assets and better liquidity, trading volume can quickly concentrate in a single location.

Especially since SpaceX remains a private company, ordinary investors cannot directly purchase its shares through traditional public stock markets. Therefore, any product that can provide relevant economic exposure while also possessing strong secondary market liquidity is naturally more likely to attract attention.

However, this structure has another side.

When a large volume of trades relies on a few flagship assets, the overall trading volume of the platform can also be more easily affected by changes in the popularity of a single asset. If the demand for SpaceX-related trades cools, or if other platforms launch more competitive products, the current high trading share may not naturally continue.

Thus, rather than simply interpreting Backpack's current data as "exploding demand for tokenized stocks," a more accurate understanding might be: trading demand is highly concentrated on a few popular assets and a few high liquidity venues.

Redemption Mechanism Creates Fundamental Differences Between Tokenized Stocks and Ordinary Crypto Tokens

Another noteworthy design is the redemption mechanism.

Some of Backpack's tokenized stocks do not solely rely on market narratives to maintain prices but allow holders to redeem corresponding underlying values according to product rules. This creates a clear distinction between them and ordinary meme coins or purely synthetic assets.

If the on-chain price of a token significantly deviates from the value of its corresponding asset, the redemption and arbitrage mechanisms can theoretically encourage traders to buy undervalued assets or sell overvalued assets, thereby bringing the two prices back in line.

Therefore, the redemption mechanism effectively adds a layer of price anchoring to on-chain assets. For traders, this reduces the risk of "on-chain token prices completely detaching from underlying assets"; for market makers, a clearer price benchmark also helps manage inventory and quotes.

This may also be one of the reasons why Backpack can continuously attract liquidity. What tokenized stocks truly need to solve is not just "turning a stock into a token," but how to simultaneously establish: underlying asset mapping, redemption mechanisms, price discovery, and secondary market liquidity. Missing any of these elements makes it difficult to form a truly mature trading market.

The Next Stage of Tokenized Stocks May Not Be About Issuing Quantity

From a broader market perspective, Solana has become one of the most active ecosystems for on-chain trading of tokenized stocks.

The original text cites data showing that during certain statistical periods, Solana accounted for the vast majority of DEX trading volume for tokenized stocks across the entire chain. Low trading fees and high throughput make it more suitable for on-chain securities trading, which is highly sensitive to trading costs.

However, Backpack's case further illustrates that the performance of public chains is merely infrastructure; what truly determines where trading volume ultimately flows is still the microstructure of the market.

For issuers, this means that future competition may no longer be just about "issuing a few more stock tokens." If a large number of assets are issued without depth, users will still be unable to trade effectively; in contrast, investing capital in professional market making, redemption channels, and liquidity infrastructure may bring more direct network effects.

From this perspective, Backpack's achievement of approximately 73% trading volume with only about 5% of the supply is not just noteworthy for the ratio itself, but for the trend behind it: tokenized stocks have begun to transition from "asset on-chain competition" to "liquidity competition."

Whoever can provide deeper markets, lower trading friction, and more credible mechanisms for connecting on-chain and off-chain prices may become the place where funds truly reside and trade.