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When it comes to crypto exchanges, crypto traders nowadays don’t have a lot of options. Some of the present solutions charge exorbitant fees, have limited currency support, or provide extremely rudimentary trading interfaces. However, there is a new kid on the street, and it’s called FTX, and it’s blowing the competition out of the water.
I’ll tell you all you need to know about this exchange in my FTX review for 2021. I will go through the platform’s different features and how you may utilize FTX to boost your crypto trading career in a more simple and flexible way.
What is FTX?
Alameda Research, a leading bitcoin liquidity provider, has funded FTX, a cryptocurrency exchange. By volume, it is one of the top five derivatives exchanges.
It’s made to let you trade Bitcoin options and other popular crypto derivatives. FTX facilitates fund transfers via cash and stable cryptocurrencies like Ethereum, Bitcoin, and Litecoin, as well as access to the finest spot trading procedures. It works with a limited number of stablecoins and altcoins.
FTX helps consumers and institutional traders diversify their crypto trading portfolios with its trading services. Multiple trading products and options are available on the site. FTX services are also designed to cater to the needs of professional traders in the market. To put it another way, the platform caters to seasoned traders.
An OTC service is also available on the FTX platform. This service assists traders who want to buy huge amounts of cryptocurrency. Traders can acquire huge crypto quantities and manage their FTX user accounts on the fly using the FTX mobile app. It is regarded as one of the finest derivatives exchanges in terms of volume.
In December 2019, Binance, a top cryptocurrency exchange on the globe, made a significant investment in FTX. This demonstrates that it is a promising and reliable platform.
What Is FTX US?
The FTX.US exchange is a US-specific version of the main FTX exchange (FTX.COM). It’s essentially the same exchange, but it’s been stripped of many of the more intriguing features and markets in order to conform with strict US laws.
FTT, FTX’s native token, is not available to residents of the United States.
How Does FTX Work?
Everyone should be able to hear their business concept out loud, according to the platform. The platform doesn’t hold back when it comes to being open about how it works. Users can settle futures trades in US dollar fiat cash on FTX. This means that on deals of $9,000, the platform generates roughly $300 profit.
All FTX-denominated deals are highlighted with crypto currencies. As a crypto exchange, this helps the site stay operating and lucrative.
Though FTX is known for its derivatives, it also has a huge number of cryptocurrency spot markets. You will be trading a real asset rather than a financial instrument that holds the asset’s fundamental worth.
FTX now has spot markets for approximately 70 different cryptocurrencies.
FTX Leveraged Tokens
Although FTX sets a leverage limit of 10x on all accounts by default as a safety measure, the platform allows for leverage of up to 101x.
The exchange also offers over 45 distinct leveraged tokens, making it very simple for users to obtain leverage. The BULL and BEAR tokens, for example, automatically monitor their exposure and rebalance daily to maintain their goal leverage and avoid liquidations.
These are ERC20 tokens that enable you to go 3x long or 3x short on a range of major digital assets such as Bitcoin, Ethereum, LINK, XTZ, BNB, and XRP.
Futures on the FTX
It’s a form of contract that allows you to purchase or sell an asset at a specified price. It enables perpetual futures on over 20 different cryptocurrencies, including BTC, BNB, LINK, and others.
The FTX crypto exchange now provides Index Futures, which make it easier to trade multiple parts of the crypto market. Large-cap, mid-cap, and small-cap coins are among them. Exchange tokens, privacy tokens, and regional baskets can also be traded. There are oil contracts that are set to expire at the WTI spot price.
Who is behind FTX?
Current CEO Sam Bankman-Fried, a former trader on Jane Street Capital’s international ETF desk, and current CTO Gary Wang, a former Google software developer, created FTX in 2018.
Prior to creating FTX, the two co-founded Alameda Research Ltd, a prominent quantitative trading and cryptocurrency liquidity provider, in 2017. Alameda aids FTX in maintaining deep order books and 24/7 OTC services.
Alameda also nurtured and produced FTX, which raised a total of $8 million across three fundraising rounds. Following the Seed and Corporate rounds in 2019, the Series B round was completed on March 2, 2020, with Liquid Value Capital as an investor.
Greylock Partners, FBG Capital, One Block Capital, Kenetic and Proof of Capital were all Seed round investors, while Binance was the Lead Investor in the Corporate round.
As a result, the exchange has a robust network and is supported by a number of renowned crypto startup firms. The core team behind FTX is similarly open and transparent, having made their identities and LinkedIn profiles public. The FTX exchange is controlled by FTX Trading LTD, an Antigua & Barbuda-based company with headquarters in Hong Kong.
What Sets FTX Apart From Other Exchanges
The quantity of unusual trade pairings available on FTX is what truly distinguishes it as a one-of-a-kind bitcoin derivatives exchange. They provide products such as Dogecoin and a BNB futures contract, for example.
If they have a futures product at all, most other exchanges just carry Bitcoin or Ethereum. Even Bitmex, the most renowned of all crypto derivatives exchanges, only offers a half-dozen currencies for trading.
Aside from trading pairs, FTX offers a few more unique trading items that only a few other exchanges provide.
The FTT Token (FTX’s Native Token)
The FTT coin is referred to by FTX as the platform’s backbone. It has a variety of applications, which we’ll go over shortly, but first, let’s go through the coin’s mechanics.
FTX, like Binance, burns FTT with trading fees. The theory is that when the coin’s circulating supply decreases, the price will rise. This is excellent for FTX and traders that own the token.
As previously stated, FTT’s most obvious use case is as a trading-fee reduction mechanism. It may also be used as collateral for futures transactions, albeit there is always the possibility of significant volatility changes, thus the margin balance must be closely monitored.
FTT Staking
Traders are also encouraged to stake FTT on the exchange through FTX. There are a few unique advantages that come with this, including:
Stakers have a distinct maker fee schedule that takes precedence over the standard fee schedule. This is on top of the existing FTT discounts.
Bonus votes: Before introducing a new financial instrument on the platform, FTX frequently surveys traders. Traders, for example, might vote on which tokenized stock groupings FTX should list next until January 11, 2021. On such surveys, FTT holders receive bonus votes.
SRM airdrop prizes have been increased: SRM is the Serum ecosystem’s native coin. Over time, FTX plans to distribute 5% of the entire supply of SRM to FTT holders.
Increased referral rebate rates: Traders who stake FTT gain a larger percentage of their referee fees in FTX’s affiliate program.
Note that the FTT token is unavailable in the United States and other restricted regions. You are not authorized to transact in FTX tokens if you live in one of these areas.
Futures Trading
The futures product is FTX’s main offering. While other exchanges, such as Binance and even the CBOE, provide Bitcoin futures, FTX stands out for having a large number of unusual futures products.
FTX, for example, offers perpetual swap futures for Bitcoin cash, Algorand, Matic, Cardano, and LEO. These are goods that are only available on a few other exchanges. The drawback is that some of the less well-known offers have limited liquidity. For example, the Dogecoin perpetual futures have a daily trading volume of less than $10,000.
Accepted Payment Methods
Credit card money transfers are supported by FTX. For credit card deposits, it employs Simplex as the online payment gateway. Various fiat deposits and withdrawals are supported by the platform currency. It does not, however, support the Indian National Rupee (INR). Binance has also invested in the platform, so this connection might happen soon.
Is the Exchange Suitable for Beginners?
Without a doubt, tradable derivatives are sophisticated financial tools. Trading bitcoin derivatives may be a difficult procedure for beginner traders due to leverage and automation.
Furthermore, trading using leverage has a high level of risk and is best suited to seasoned traders.
Given the large range of functions available, it’s clear that FTX wasn’t designed with novices in mind. Trading volatility products like options, futures, and leveraged tokens, after all, necessitates a thorough grasp of both the underlying asset and the market.
As a result, if you’re just getting started with cryptocurrency trading, we don’t advocate trading derivatives on FTX.
FTX, on the other hand, still has a lot of spot markets that aren’t prevalent on other cryptocurrency exchanges. If you’re a beginner trader looking for low-cap digital assets, FTX is a good place to start.
However, before you get in, make sure you complete your homework on the cryptocurrency market in question.
Pros and Cons of Using FTX
The Pros
- Credit/debit cards can be used to buy cryptocurrency.
- FTT tokens offer lower trading fees.
- Fees for trading are competitive.
- A vast array of unrivaled derivatives items.
- Very good liquidity.
The Cons
- Tokens with a high leverage are dangerous.
- Residents of the United States have limited access to this site.
- Designed for more experienced traders.
Fees and Charges for FTX
There are no costs on deposits or withdrawals while using FTX, and there are no fees on futures settlements. Trading over the counter (OTC) or from your wallet is likewise fee-free because all costs are included in the price you are offered.
The creation and redemption costs for leveraged tokens are 0.10 percent, while the daily management fees are 0.03 percent. If you use 50x leverage, your trading costs will increase by 0.02 percent, and if you use 100x leverage, your trading fees will increase by 0.03 percent, which will be paid into the insurance fund.
It’s important to note that MOVE contract costs are determined by the price of the underlying index, not the price of the MOVE contract.
It’s also worth noting that FTT holdings are unable to lower taker fees below 0.015 percent.
Is the FTX Exchange Safe?
FTX, like every other cryptocurrency exchange in the sector, emphasizes that security is a key priority. For this purpose, FTX provides a digital wallet in which you can store your digital assets.
The site also encourages customers to use two-factor authentication, which requires a code to access trade money and make a withdrawal.
FTX, according to its website, collaborates with researchers on a regular basis to assure the security of its goods and services.
However, there is presently no specific section on the FTX website dedicated to the exchange’s security. On the other hand, complete records of their liquidation engine and insurance fund are available.
This gives us the sense that FTX has given substantial thought to the platform’s safety features. Furthermore, FTX has been free of security flaws and malware concerns since its debut.
For the time being, it appears that FTX has sufficient processes and mechanisms in place to ensure the safety of traders.
Customer Service at FTX
In terms of customer support, FTX has made sure that people can reach them via a variety of channels.
To begin, FTX has compiled a comprehensive collection of instructions and articles on the exchange’s many features. If you can’t find answers to your questions in these instructions, you can always use the live chat box.
You may also contact the customer service team directly through email.
Notably, the FTX team has gone to great lengths to cater to its diverse user base via social media outlets such as Facebook and Youtube.
Users may also connect with other traders in the FTX community through specialized Telegram and WeChat groups for different languages.
The Referral Program
The FTX referral program is rather lucrative. Anyone who introduces a friend is eligible for a 30% discount on all trading costs. The buddy will also receive a 5% cost reduction; it’s a win-win situation for everyone!
Final Thoughts
FTX is steadily carving out a niche for itself as a link between advanced trading capabilities and a novice audience. However, it isn’t as user-friendly as one might think—these capabilities are still quite complex, and users need to have considerable knowledge of how to utilize them. For example, leveraged trading and options are very dangerous, making an already volatile asset class like bitcoin increasingly worse.
Consider the exponential expansion of BNB in the Binance ecosystem: the FTT token is a unique characteristic that should not be disregarded. Although the exchange includes numerous DeFi tokens, its US version is still rather limited for individuals seeking exposure to the DeFi ecosystem’s more exotic tokens.
