FTX: Uncle Sam's Exchange

History

The exchange was created by the Alameda Research fund, also founded by Sam. However, the idea of launching a new exchange caused controversy within the company. It was a very risky decision, since the company was considered extremely understaffed.

And yet in April 2019 FTX was registered in the jurisdiction of Antigua and Barbuda. A month later, work began. The main technical issues of the project were solved by Gary Wang, a former Google programmer. The basic code of the exchange was written four months later.

Things were slow at first. A dozen employees worked in the WeWork co-working room in Hong Kong and tried to attract traders to the new exchange. Soon the FTX founder found a profitable niche. He targeted sophisticated investors trading derivatives - options on Bitcoin or futures on Ethereum.

A year after its launch, FTX gained notoriety for cutting-edge trading solutions and the first cryptocurrency derivatives.

In the summer of 2019, the exchange launched an internal FTT token and raised $8 million from venture capital firms. In December, Binance acquired a large stake in FTX.

In 2020, the company bought investment service Blockfolio.

On July 20, 2021, FTX announced it had raised $900 million from more than 60 investors, after which the company was valued at $18 billion.

Investors include Paradigm, Sequoia Capital, Ribbit Capital, Third Point, Lightspeed Venture Partners, Coinbase Ventures, Softbank, Sino Global Capital, Multicoin Capital, investor Paul Tudor Jones' family, VanEck, Circle, and hedge funds Izzy Englander and Alan Howard.

Features

Liquidity of derivatives

Not only does FTX offer many opportunities for normal trading, but it is also one of the largest crypto derivatives exchanges.

Therefore, you are unlikely to encounter slippage or lack of liquidity when trading these assets.

The largest trading volumes on the exchange come from cryptocurrency futures contracts.

But there are whole sections of the financial markets on the exchange that have very low liquidity. These are all tokenized stocks, most volatility contracts and the predictions market.

Trading opportunities

The main feature of FTX, which distinguishes the exchange among competitors - it's trading opportunities. Since the exchange was created by an experienced team of traders for traders, the trading toolkit is one of the most diverse.

• Futures. FTX has a fairly large selection of cryptocurrency futures. Both open-ended and fixed-term contracts are available.
  The maximum leverage for futures trading is 20:1. This is not the largest leverage among cryptocurrency exchanges, but for most traders it will be enough.
• Spot. FTX has a large list of trading pairs for spot with good trading volumes. Predominantly cryptocurrency trading pairs are traded to USD and USDT, there are also pairs to BTC.
  For spot trading on FTX, there is also margin trading. Maximum leverage 10:1
• Leveraged Tokens. One of the popular and unique trading products of the FTX exchange are the so-called leveraged tokens.

These tokens have the name of an ordinary cryptocurrency or token, but one of four words is added to the name, denoting the coefficient by which the change in the price of the token is multiplied:
BULL (x3), BEAR(-x3), HEDGE(-x1), HALF(x0.5)
In other words, if the price of the underlying asset (e.g. DOGE) increases by 1%, the token with a leverage on DOGE called DOGEBULL should increase by 3%.

In general, liquidity for most of the available pairs is small, but the first ~20 trading pairs have acceptable trading volume and liquidity for comfortable trading.

The mandatory mechanism of matching the price of the token with the leverage to the underlying asset is called rebalancing, which occurs once a day or when a certain threshold value is reached and brings the price of the token in line with the underlying asset.

But during the day, if the price does not deviate by the threshold - its movement depends on traders, and the lack of liquidity exacerbates this problem even more.

Dynamic Commissions

At FTX there are different levels of commissions, which depends on the user's total trading volume for the month.

Exchange token

Like many other cryptocurrency exchanges, FTX has an internal FTT token focused on use in the exchange ecosystem.

As with exchange tokens, if you keep a certain amount of FTT on your FTX balance, you will receive a discount on the exchange's trading fees.

In addition to discounts, tokens are constantly bought back from the market and burned, which has a positive effect on their price.

NFT Marketplace

Following the trend for NFT-products, the exchange FTX decided to create its own marketplace for placing NFT. In general, the interface and functionality of the marketplace can be called convenient.

Marketplace is divided into two sections:

• Collections: a collection of NFTs on a particular topic, several NFTs included at once, the number is not limited - from a few pieces to several hundred.
• NFT: sold in single units, the site allows you to filter your search by selected parameters.

There are two types of NFT sales:

• Buy now is a fixed-price sale.
• Auction - Buyers can bid on the NFT, competing against each other until time runs out.

When you click on an NFT, brief information will be shown: author, collection affiliation, commission and transaction history. The exchange also provides an opportunity to create your own NFT right on the site.

Own OTC-market

As a major cryptocurrency exchange, FTX has its own over-the-counter trading market (OTC market). It's called the FTX OTC Portal. Transactions are commission-free and executed instantly.

The most important advantage compared to competitors is the large selection of cryptocurrencies, almost unlimited volumes and the ability to buy not only for USD, but also a number of other stabelcoins. As for other trading functions, verification is required.

Security

Throughout its history, the exchange has never been subjected to hacking or leaks of users' personal information. That is already a good indicator of reliability for cryptocurrency exchanges.

Users can secure their account with special security features:

• Two-factor authentication (2FA) is the standard method of account protection. You can choose from Authy/Google Authenticator, FIDO/U2F/YUBIKEY security keys or SMS confirmation.
• Withdrawal password - you can assign a special password, which will be asked each time you withdraw funds.
• A white list of addresses is also a standard method of protecting funds; you designate a list of crypto-purses to which you can freely send funds, once designated, you must wait a certain amount of time for confirmation - this is also a necessary security measure.
• Two-factor authorization for withdrawal - if you want to withdraw funds, you must enter 2FA code, by default this feature is enabled, but if you want it can be disabled.

In addition, you can view the history of logins (history of login sessions) and, if suspicious activity is detected, take all methods to protect the account.