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Aug 27, 2020

20 min

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20 min

FTX Token: A Complete Guide

FTX Token (FTT) is the unit virtual currency used on the FTX ecosystem. It serves as the backbone of the FTX crypto derivatives exchange that offers leveraged trading. Since FTX exchange provides futures trading, FTT can be used as collateral, which increases its utility. FTX token has a total supply of 344,446, 952 FTT with a circulating supply of 95, 375,037 tokens. FTT is available in FTT/USD, FTT/USDT, and FTT/BTC markets. It’s listed on Binance, Huobi, BitMax, CoinEx, WazirX, and Bitfinex.


Brief History

FTX Token was developed by an all-star team who come from a background of Wall Street firms such as Jane Street and Optiver. The CEO of FTX, Sam Bankman-Fried, who also started Alameda Research, comes from a background of futures trading and an MIT degree holder in Physics. Others include Gary Wang, who was a software engineer at Google, and Nishad Singh, a former engineer at Facebook. Another notable part of the FTX team is Jen Chan, the company’s CFO, the former head of Alter Domus’s office in Hong Kong.

Dan Friedberg, a former partner at Fenwick & West LLP, provides general counsel to the FTX project. The company’s COO, Constance Wang, has worked at Credit Suisse. FTX takes pride in professionalism and believes that an all-star team can help achieve its mission.

FTX has partnered and collaborated with lots of cryptocurrency firms in the industry. Some of the notable partners of FTX Token include; Binance crypto exchange, Circle, Alameda Research, True USD, Paxo, Consensus Labs, Bitfinex, and FBG Capital. One of the fundamental goals of FTX Token is donating to charities around the world. Consequently, employees and affiliates of FTX have donated over $10 million to various charitable causes. They have contributed to Effective Autism, Give Well, The Humane League, and Open AI.


FTX Token Technology and Benefits

FTX is an innovative derivatives platform that boasts of deep order books, low fees, and tight spreads. In 2018, the platform launched an OTC RFQ system, which allows the exchange to scale its volume to $30 million even in a bear market. FTX’s world-class portal has an intuitive UI and API whose settlement system is secure and straight forward.

FTX has developed over the last one and a half years to become a leading trader of futures in the market. The FTX team felt that the current futures platforms created a complex environment that made it hard for institutions to trade-in. After lots of work, the team developed the FTX futures platform that has risen to disrupt the market.

Some of the critical features of FTX futures include:

  • Ability to prevent clawbacks – The current futures systems have a reduced risk management system that results in millions of losses through clawbacks. FTX’s 3-tiered liquidation model helps reduce the occurrence of clawbacks. To start with, FTX closes down positions with rate-limited liquidation orders. The platform has a unique liquidity program that intervenes to provide to accounts that face bankruptcy. The platform also leverages an insurance fund that helps prevent losses.
  • Centralized collateral pool – Unlike other futures exchanges, FTX posts collateral in multiple accounts and tokens. The same system is used to mature traditional futures today, allowing traders to post collateral in a single currency. The system also allows universal stablecoin settlement, enabling traders to use stable coins as collateral for all derivative products. By using stablecoins, traders get a USD-based price exposure without having a bank account. At the moment, the only two stablecoins fit for this feature are USDC and TUSD.
  • Non-inverted futures – Usually, in the futures market, when a pair is stated as BTC/USD, it often means USD/BTC. However, for FTX, the futures aren’t inverted, which means a user’s USD PnL is one’s actual number of BTC contracts. The order book indicates the number of BTC contracts that a person owns.
  • Leveraged tokens – These ERC-20 compliant tokens are a genius product by FTX and put it on the crypto space map. Most spot exchanges don’t have a way to short or have a leveraged position. However, the FTX leveraged token system lets traders take a short position without trading on a margin. The platform offers 3x, -1x, or -3x leveraged tokens for BTC, ETHC, XRP, EOS, USDT, BNB, TRX, LEO, and BCH.
  • OTC portal – Thanks to Alameda Research, the platform has embedded an OTC portal that lets traders transact at the click of a button. The portal gives traders access to Alameda’s deep liquidity pool at no fees.

Due to the above features, the FTX Token is backed by a platform with a robust architecture that is hard to replicate. The platform is backed by Alameda research, which is the most extensive liquidity provider in the secondary markets. This implies:

  • Live product – The FTX Token is already live and functioning. Most projects are still issuing a token raise with promises of future returns.
  • Liquidity – At the moment, only BitMEX BTC perpetual futures are more liquid than FTX. Due to the backing by Alameda Research, traders are trading upwards of $30 million worth of transactions daily. For an exchange that’s barely three years old in the market, that’s an impressive record.
  • Domain expertise – Designers of FTX are people who have worked in top positions in the industry and have employed this experience in product development. The team fully understands the futures markets, especially things to do with collateral, maintenance margin, and the liquidation process. FTX relies heavily on Alameda Research that has spent thousands of hours studying the market and understanding every aspect.
  • New product development – FTX was the first to offer USDT futures. The product put FTX on the map since many institutions were looking for a way to leverage USDT but were hesitant due to Tether’s volatility. There’s also the Leveraged Token brought to the market by FTX. The sector is unexplored, and FTX has provided traders with a huge opportunity to implement it. The unique stablecoin settlement product offered by FTX is a trailblazer, and most futures exchanges are already adopting the innovative design.
  • Strong credibility – Due to its connection to Alameda, FTX has a strong network and reputation. Alameda has a stable relationship with leading exchanges such as Binance, Huobi, and OKEx. The platform’s credibility has attracted offers from various exchanges and crypto platforms.
  • Fast development – Developing large futures products takes time due to the complexity of products. However, FTX can leverage on the Alameda team, which are used to building complex cryptosystems under pressure. That way, the platform can provide excellent features in a day. The unique backing of Alameda Research gives FTX a substantial head start in the crypto space, which is hard to replicate.


How does FTX Token work?

FTX leveraged tokens are ERC-20 tokens provided on the Ethereum blockchain. The product was first developed by FTX, allowing traders to engage in cryptocurrencies without managing their leverage position. Usually, when getting into a leveraged position with a cryptocurrency, you have to worry about liquidation, margins, collateral, and funding rates. However, FTX leveraged tokens have taken care of these hustles making the product unique and attractive.

Since the leveraged products are on a public blockchain, they function similarly to other tokens. Therefore, you can store, trade, or transfer like other ERC-20 compliant tokens. However, the leveraged tokens may lose value in a zig-zag market and are meant for short term trading.

FTX leveraged token exposes the trader to leveraged positions. The token is issued on FTX exchange but can be traded on other exchanges. The tokens are easily bought and sold like other ERC-20 tokens. While these tokens’ creation and development make sense for advanced traders, the process is attractive and exciting.

FTX is keen on increasing the FTX token utility, which is the backbone of the FTX derivatives exchange. The platform has offered incentives to increase the demand for FTT while reducing its circulating supply. FTX has done the following to increase the utility of FTT;

  • Token burn – The platform will repurchase and burn FTT tokens equivalent to 33% of the fees generated on the FTX markets, 10% of the net additions to the insurance fund, and 5% of the funds raised from other uses on the platform. FTX has a schedule that involves the burning of FTT every week. At the moment, the schedule starts at 10 pm HKT on Monday and ends at 11.59 pm HKT on Tuesday.
  • Collateral – The unique thing about FTT is that it can be used as collateral for futures positions. FTX plans to allow FTT as collateral for margin trading in the future. Doing so increases the utility and demand for FTT.
  • Discounts – Customers who hold FTT for a long time will get to enjoy lower fees on the FTX futures market.
  • OTC rebates – Those that hold FTT will receive rebates on their OTC trading on FTX. This has increased the demand for FTT.
  • Socialized gains – Since FTX doesn’t suffer from clawbacks faced by other exchanges in the market, it has managed to increase its insurance fund. Its unique backstop liquidity provided by Alameda allows FTX to handle overdue accounts, which put it a spot ahead of the rest.
  • White label solutions – FTX has received offers by crypto institutions that want to purchase the platform’s white label version of the OTC portal. The purchases can be made using the FTT token, which increases its utility.
  • Future growth – FTX is committed to providing revolutionary products to the crypto market, and there’s no limit to what the platform can achieve. For example, the platform may launch a spot exchange where FTT will be used for the Initial Coin Offering.

Unlocking of the FTT token has been a significant part of the project. So far, locked tokens have been released in three rounds started on 29th July 2019, where 50,000,00 FTT were sold in round one, 6,500,000 were sold in round two, and 2,800,000 were sold in round three. The company tokens have been unlocked for three years, and selling will end on 1st May 2022.

FTX has a commendable revenue model and is always looking for creative ways to add to their revenue. One source of their income is through exchange fees where the maker and taker fees are two bps and seven bps, respectively. The daily management fees for leveraged tokens are three bps, while the creation fees are ten bps. Other ways that FTX generates fees are through options, spot exchange fees, and margin trading. The fast-growing FTX OTC portal also makes tens of millions of dollars each day.


Perspectives and Takeaway

More than just a crypto derivatives exchange.

Over the short period that FTX has been on the crypto space, it has set a pace that other exchanges are finding hard to follow. Its unique and innovative products have left many amazed at the potential that the secondary markets hold. The team at FTX is on a mission to provide customers and other stakeholders with never-seen derivatives products, leveraged tokens, options, and volatility products. Their robust and initiative platform is user friendly and makes it easy for first-time users to enjoy futures trading.

At the moment, FTX supports over 115 cryptocurrencies on the platform with more coming up. In less than a year, FTX has launched eight innovative futures products making the platform a sought after leader in the derivatives market. In May 2020, FTX launched a BTC hash rate futures tool that allowed Bitcoin miners to leverage against mining difficult. The robust architecture of the product showed that FTX was committed and could cater to different people’s unique demands in the crypto space.

Recently FTX introduced MOVE contracts on its platform, representing the absolute value that a contract moves in a given period. With three types of MOVE contracts, daily, weekly, and quarterly, FTX has shown that it’s determined to ensure traders’ endless opportunities. Its onboarding process that takes about 5 minutes has also made it attractive to investors and other market players.

Leading US exchange announced custodial services for FTT, terming it the ‘largest exchange to date.’ Through a spot exchange, its launch in the United States has done wonders for the FTX brand, which registered as a money service provider to comply with the country’s regulations. Last year in December, Binance announced a strategic crypto investment of an undisclosed amount in FTX, which is designed to add value to the crypto ecosystem.

FTX has given crypto traders in the market lots of features that cater to high volumes. The firm has reached out to significant crypto providers who have responded positively, and FTX believes that they can hit a daily trading volume of $ 50 million. FTX believes that it can offer $10 million daily trading volume through their unique leveraged token product. FTX is also always reaching out to crypto platforms to onboard them on their innovative OTC portal. Through new clients, FTX hopes to add another $25 million to its daily trading volume. Ultimately, FTX believes that a daily trading volume of $5 billion is a possibility.

The future looks bright for FTX as it continues to position itself on the secondary crypto markets space through strategic partnerships and innovative products. The platform thrives well despite the positive competition, which ensures that the market has nothing but quality products. Through referrals, FTX has quickly expanded its OTC portal, which offers some of the industry’s tightest spreads. FTX is targeting large crypto institutions and is always working to ensure traders and investors work with cryptocurrency products in the most efficient manner possible.


FTX Token Website

For everything you need to know about FTX, visit the official FTX website.


FTX Token Twitter

To keep up with the latest updates from FTX, follow them on Twitter.


FTX Token Telegram

Join the conversation on Telegram to stay on the know about FTX.


How to store and manage FTX (FTT)?

FTX Token is compatible with numerous wallet providers, including Atomic Wallet, a secure and decentralized crypto wallet. Atomic Wallet gives you access to over 300 cryptocurrencies through a decentralized platform built on a sophisticated architecture that keeps your investments safe. On Atomic Wallet, you can conveniently manage, earn, stake, and buy many cryptocurrencies and build your investment portfolio. Install the user-friendly Atomic Wallet App now and manage and exchange your FTX Token (FTT) today.

Conclusion

Backed by a reliable team of innovative and professional individuals, FTX is going far in the crypto market. The young platform has already carved a name in the ever-changing crypto landscape and promises to keep providing the space with revolutionary products. At this rate, FTT will soon rank as a top ten cryptocurrency with millions of investors.

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