Read on to learn from my experience of using FTX exchange.
November 2022- In an unexpected move, the FTX exchange has become illiquid, and they have halted withdrawals. Do not use FTX exchange until the situation improves.
Well, in past years, I have used and reviewed several crypto exchanges, and only a few of them get me excited with their offerings. Binance, and Bybit are some exchanges every crypto user should use. And, if you are based out of the U.S., then you should use Coinbase or CEX, two popular exchanges.
And today, we are doing a deep-dive and review of a popular crypto exchange called FTX. There is quite an exciting tale about FTX’s history and the innovation they are bringing into the crypto space. We will look into all these and more in this detailed review.
If you want to explore FTX along with reading this review, sign up with the below-mentioned special link, which will get you 5% off on trading fees forever.
Create a Free Account on FTX
I also suggest you grab their native FTT token, which helps you save extra on trading fees. I have also dedicated a section about the FTT token below, which may be appealing to investors.
Moving ahead…
FTX Exchange is developed by FTX Trading Ltd., a company incorporated in Antigua and Barbuda, the Caribbean in May 2019. Its offices are based out of Hong Kong.
Compared to other established exchanges like Binance, and Bitmex, the FTX exchange is pretty new at the moment, but I understand that it may potentially become a new Binance.
About FTX Exchange: Brief History
Before FTX, the founders incorporated Alameda Research in October 2017. Alameda Research is a quantitative cryptocurrency trading firm and liquidity provider. It manages over USD 100 million in digital assets and trades USD 600 million to USD 1.5 billion per day across thousands of products: all major coins and altcoins, as well as their derivatives. You can read more about Alameda Research here.
Why the founders of Alameda entered into a new venture with FTX can be explained by the following explanation from their website:
“Over the past 1.5 years, we have been one of the largest traders in the futures market. We ran into many problems with current futures exchanges that we believe are preventing the space from becoming sufficiently mature for institutions to trade-in. Hoping to improve the ecosystem, we’ve written countless white papers and given hours of feedback to these exchanges, but to no avail. Finally, we decided to take matters into our own hands and built FTX.”
Compelling story. Is in’t it?
FTX Team and Foundation
FTX team comes from some leading Wall Street quant funds and tech companies: Jane Street, Optiver, Susquehanna, Facebook, and Google. The team has ample exposure to the traditional secondary market. Members have backgrounds in equity derivatives trading and seem to understand how derivatives are traditionally designed and what kind of derivatives are in demand.
Following are the lead members of the organization:
Sam Bankman-Fried, CEO and Co-Founder
Before founding Alameda and then FTX, Sam was a trader on Jane Street Capital’s international ETF desk. He traded a variety of ETFs, futures, currencies, and equities and designed their automated OTC trading system. He graduated from MIT with a degree in physics.
Gary Wang, CTO, and Co-Founder
Gary was a software engineer at Google before founding Alameda and FTX. He built systems to aggregate prices across millions of flights, decreasing latency and memory usage by over 50%. He graduated from MIT with a degree in Mathematics with Computer Science.
What features does FTX Exchange offer?
The major features of the exchange are as follows:
Types of Supported Transactions
Spot and Futures Trading
A user can trade on the spot as well as the futures market through FTX. Further, the futures contracts on FTX are settled in stablecoin i.e. futures contracts are BTC/USD and not USD/BTC. Using stablecoins as collateral vastly simplifies the user experience, and also substantially decreases margin requirements and trading costs.
FTX has Index futures as well through which a user can trade on an entire sector of the cryptocurrency ecosystem. Thus, spreading his / her risk exposure. For Eg: FTX has a Shitcoin Index Perpetual Futures and an Altcoin Index Perpetual Future.
Further, a specific category of the futures contract, “Move contracts,” allows you to trade on the movement of the price of a specific cryptocurrency by risking only a small amount.
Tokenized Stocks
Tokenized stocks are the token form of traditional equity stocks. FTX offers many tokenized stocks such as Tesla, Amazon, Apple, Nokia, and many more.
Please note that FTX routes all these tokens through a third-party organization, CM Equity which is regulated in Germany. Further, CM-Equity provides the custody of the equities to a third-party brokerage firm. In short, these tokenized tokens are provided to you by CM Equity through FTX.
Leveraged Tokens
FTX’s leverage tokens free you from micromanaging your collateral or risk. These are ERC20 tokens that have leveraged exposure to crypto.
There are four types of leveraged coins:
BULL (+3x),
BEAR (-3x),
HEDGE (-1x), and
HALF (+0.5x).
Their BULL and BEAR leverage tokens automatically manage their exposure, rebalancing to maintain their target leverage and prevent liquidations. As they are ERC20 tokens, you can withdraw them from the platform and trade them.
Prediction Markets
These are futures contracts that are similar to conventional betting. A user can bet on a real-world event. If you win, the contract will be settled at 100%, and if you lose, the contract will be settled at 0%.
For Example, There is a Trump2024 future which will mature at USD 1 if Mr. Donald Trump becomes president in the 2024 US elections. FTX also launched futures for SuperBowl teams.
Other Features of FTX Exchange:
OTC Transactions
Alameda Research has an OTC platform for bulk traders of cryptocurrencies. To give their OTC counterparties easy access to derivatives, their OTC platform has been integrated with FTX Exchange.
Coin Staking
FTX.com provides an option to stake your cryptocurrency and earn staking rewards on the same. Currently, this is available only on 4 tokens.
Sub-account – Manage multiple accounts from one
FTX-sub-account-feature
FTX has subaccounts that allow you the option to split up your positions.
you can create new subaccounts, switch which subaccount you’re using, and transfer funds between subaccounts.
Therefore, you can create separate accounts for your trading and investing activities.
Centralized Collateral Wallet
With existing futures exchanges, collateral is fragmented across many separate tokens and margin wallets. This makes it difficult for traders to rebalance and prevent positions from getting liquidated. To solve these issues, FTX derivatives are stablecoin-settled and require only one universal margin wallet.
Each subaccount has one central collateral wallet and uses cross margining for the account.
Dust Trading
With this feature, a user can convert his or her small balances into FTT Token (an inhouse token of FTX Exchange, more on this later).
For more details on features offered by FTX, click here.
Note: Users from the USA cannot trade on FTX.com, but residents of the United States can trade on FTX.US (there is a different mobile application for FTX.US)
FTX Mobile app:
I can’t imagine a world-class exchange without a mobile trading app. FTX offers a fully functional mobile app that works on iOS and Android. In my testing, the app is blazing fast and gives a better experience than the web version of FTX.
Download Mobile app
What are the benefits of FTX Exchange?
User-friendly Interface – FTX has a very interactive website interface in which a user can customize chart view based on his or her requirements.
Mobile App – The exchange has a mobile application for android and IOS devices to keep the user updated on the go. The app is fully functional, and if you enjoy trading on mobile, the app will keep you engaged.
Community and Social Media Presence – FTX has a substantial social media presence.
Link to FTX social media platforms
Blog
Medium Blog
Twitter- @FTX_Official
SBF Twitter – @SBF_Alameda
YouTube channel
Whether FTX is Safe and Secure?
FTX database is kept in secured cold storage.
Users can add 2 Factor Authentication to their account.
A user can whitelist his IP with which an API key is only accessible from a specified IP.
FTT and Leveraged Token security audit is done by Blockchain Consilium. Their latest security audit report can be accessed through the FTX website.
FTX Insurance Funds provide insurance against possible cyber threats.
What are the Transaction Fees for FTX?
FTX does not charge any fee for deposit or withdrawal of funds.
FTX has a tiered fee structure for all futures and spot markets, as follows:
Besides, there are fee discounts for holders of FTT. The current discounts, based on your FTT holdings:
For fees on other products and other fee-related information click here.
FTT Token: Everything You Need To Know
FTT is the native token of the FTX Exchange (like BNB is the native token of Binance). For the whitepaper of FTT Token click here.
The Market Cap of FTT is USD 1.9 Billion with a total supply of 340 Million and a circulating supply of 89 Million (26% of total supply).
Use cases of FTT:
FTT is the backbone of the FTX ecosystem.
Token Burn / Revenue Share – Approximately one-third of all fees generated on FTX is used for an FTT repurchase. Any FTT bought this way is burned.
Collateral – FTT can be used as collateral for futures positions. This increases utility and demand for FTT.
Discount on trading fees – Customers who hold a certain amount of FTT for a period of time will receive a discount in the form of lower transaction fees. This will further increase demand for FTT.
OTC Rebates – Customers who hold enough FTT will receive rebates from all of their OTC trading on FTX.
OTC Burn – There will be a repurchase and burning of FTT based on OTC volumes and revenue from the FTX OTC portal.
Whether Are there any concerns regarding FTX?
The leveraged tokens offered by FTX have a considerable risk associated with them, a user is advised to DYOR before investing in these products.
The platform is relatively new in comparison with the top exchanges of the market.
Some customer reviews are accusing FTX of having weak customer support services.
Conclusion: FTX Review
With a substantial number of features and benefits, FTX is a wholesome exchange that provides almost every traditional (spot, futures, staking, 2FA, etc.) and many new services (tokenized stocks, leveraged tokens, prediction market, etc.) to its users.
Create an FTX account (Get 5% discount on fees)
Further, with the growth potential of the exchange, there is a substantial potential upside to the exchange’s native token FTT.
Have you used FTX exchange? What’s your feedback and review of FTX exchange? Do you find them safe and secure for general investors and traders? Let me know your thoughts in the comment below.
