The FTX token is an exchange token created by the FTX Exchange with the ticker FTT to power its ecosystem and provide value inside the exchange’s activities.
The exchange was founded in an attempt to avoid clawbacks in cryptocurrency exchanges.
This is accomplished through a three-tier liquidation strategy that utilises rate-limited orders to close positions and a customer loss insurance fund. It accomplishes this in part by pooling collateral across all tokens in a single universal stable coin wallet. This idea is based on how typical futures markets work. Traders can also use it to open short trades or leverage their money without utilising margin or futures.
What is the FTX Token FTT?
The FTT coin was established with the FTX Exchange in mind. It is an ERC-20 token that serves as the lynchpin of the exchange’s ecosystem, with a variety of impressive uses inside the exchange’s operations. It is just like Binance’s BNB token and Huobi’s HT token and since exchange tokens, in general, have fared well over the years, this has sparked a lot of interest in FTT from investors.
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FTT Token Utility
The utility of an exchange token, or the use cases it fulfils, is what determines its underlying value. To raise its value, a token must have limited availability. With that in mind, let’s look at the token utility of FTT and how its supply has been controlled.
- Discounted Trading Fees – A common expectation for any exchange token is that it will provide discounted trading fees to individuals who have it. Of course, FTT meets these expectations, and traders are encouraged to buy FTT tokens in order to lower their trading expenses. Depending on the quantity of FTT held, trading fees are reduced by three per cent to 60%.
- Socialised Gains – One approach for an exchange to avoid clawbacks is to finance an insurance account that protects traders in the case of extreme market volatility. FTX has gone even farther by implementing a rule that any FTT holders at the time will receive a bonus payment from the surplus insurance funds if their insurance fund shows a big increase. If we get another extended bull market in cryptocurrencies, this may turn FTT into a dividend-paying company.
- Token Burns — one way that FTX manipulates supply to raise the price of FTT is through token burns. FTX buys back FTT tokens and burns them, or destroys them, with one-third of the fees collected by the exchange. FTX has stated that they will continue to do so until 50% of all FTT generated has been burned.
- OTC Rebates-Trading volumes in excess of $500 million have been reported. FTX is one of the world’s major cryptocurrency exchanges, but owing to a relationship with Alameda Research, they can also provide an over-the-counter (OTC) trading platform. High-volume investors and traders who don’t want their trades to affect market prices generally use this platform. According to the FTT Whitepaper, if these OTC traders possess enough FTT, they will earn a rebate.
- Future Plans — FTX has announced that they intend to develop a spot trading platform in the future. However, no specific timetable has been set. They also stated that this spot trading platform might evolve to an IEO platform similar to Binance Launchpad. Given that FTT would very probably be utilised for purchases on such a platform, demand for FTT should increase once it is established.
How does FTX work?
The FTX ecosystem was designed to prevent clawbacks. A clawback is when a party can not repay on time so the lender takes the money back with penalties. FTX uses a three-tiered liquidation model to ensure liquidity and prevent clawbacks. The model also closes positions with a rate-limited order and maintains an insurance fund to prevent customer losses. The FTX ecosystem also maintains collateral that is sharded in one universal stablecoin wallet. The platform also allows taking leveraged positions with margins or futures. Instead, the platform uses leveraged tokens that mimic leveraged trading experiences.
The FTX ecosystem provides the following key products:
Futures:
Traders can take either a long position or a short position bet on a cryptocurrency pair. The margins rise up to 101x and stablecoins such as USDT are used for collateral.
Leveraged Tokens:
FTX offers ERC20-based tokens that allow traders to open 3X leveraged exposure against the underlying trading pair. These tokens can be used without any margin requirement.
Options:
Traders can speculate on the future price of a pair and hedge against their open positions using call or put options.
MOVE:
Moves are contracts that allow traders to bet how far the price of a cryptocurrency will move over a certain period of time, irrespective of the direction. As long as the price moves you earn money.
Spot Markets:
The FTX platform offers over 100 different spot trading pairs of the most commonly known cryptocurrencies such as Bitcoin, Ethereum, Binance Coin, Chainlink, and Ripple’s XRP.
How many FTX token (FTT) coins are there in circulation?
FTX is a cryptocurrency derivatives exchange that specialises in institutional-grade solutions such as futures, leveraged tokens, and OTC trading and it is currently pegged at $61.57 dollars at the time of writing this according to CoinGecko. The FTX Token serves as the foundation of the FTX ecosystem, which was created to maximise network effects and demand for FTT while reducing its circulating supply. As of February 2021, it has a circulating supply of roughly 94 million tokens and a total supply of around 345 million.
Unique Features Of FTX Token (FTT)
According to FTX’s official website, its trading platform mechanisms are hard to replicate by anyone which makes it a unique asset in the blockchain world.
Leveraged Tokens
The FTX trading platform provides its users with leveraged tokens that enable traders to enter into short or leveraged positions without having to trade on margin. A trader who wishes to buy 6x short Ethereum, for example, can simply purchase a 6x short Ethereum leveraged token on FTX. ERC-20-based leveraged tokens can be listed on any spot exchange and leveraged tokens like BTC, ETH, EOS, USDT and others can be acquired by FTX platform users.
Universal Stablecoin and Centralized Collateral Pool
In many futures exchanges, collateral is dispersed over several distinct tokens and margin wallets, which makes it harder for traders to rebalance and avoid liquidating holdings. Therefore a centralized collateral pool and universal stablecoin settlement are needed. FTX derivatives are stablecoin-settled, requiring only one universal margin wallet to overcome these problems.
Clawback Prevention
When an account goes beyond bankruptcy, it triggers socialized losses, clawbacks and auto-deleveraging. If a user has a collateralized futures position and markets move against their account to the point where their net asset value is negative, the losses have to be fulfilled by someone. However, because no exchange can seize assets from a bankrupt account’s owner outside of the system in crypto, the account owner is trapped with other users, the ones who aren’t getting liquidated and will be paying the bills.
The FTX trading platform aims to cut down the socialized losses that occur in many derivatives exchanges by employing a three-tiered liquidation strategy that minimizes the probability of clawback.
According to the FTX platform’s official website, the backstop liquidity provider scheme will be sufficient to avoid any clawbacks. According to their internal tests, market movements of 40% in 20 minutes did not result in clawbacks and the combination of on-exchange liquidity and backup liquidity providers was able to supply to all of the almost bankrupt accounts before they fell under.
USDT Futures
Considering USDT’s past volatility, many major crypto businesses need the means to hedge USDT deltas, and USDT futures will provide that feature to them.
Use Cases Of FTT Token:
Trading Fees: FTX futures trading fees are less and OTC spreads are tighter as compared to other crypto exchanges.
White Label Solutions: A white label variant of the FTX OTC site and futures market has piqued the curiosity of crypto institutions and large investors for which the purchase will be offered in FTT token.
FTT as Collateral: To increase the demand for FTT in the long run, it can be used as collateral in futures trading.
FTT Token Value: The value of the FTT token is directly proportional to the future expansion and upgrades of the FTX platform. Holders of the FTT token can expect a rise in their holdings as the price of FTT increases.
Create Leveraged Token Listing: Upcoming projects can pay a fee and generate leveraged tokens with their coin.
Token Burn/Revenue Share: The FTT that is bought from FTX will have a transaction fee, one-third of which will be utilized to repurchase FTT tokens and later become a part of the burning process.
Extra Gains For FTT Holders: When big market fluctuations will occur in the crypto market, FTT holders will profit from the FTX backup liquidity fund.
FTX Security and Compliance
To open an FTX account and make withdrawals, the company required customers to secure their accounts with two-factor authentication (2FA) and a password combination with complex character requirements. Withdrawals were locked if an account’s password or 2FA information was changed.
Registered users could delegate custom logins to subaccounts and set security permissions specifying which internet protocol (IP) or cryptocurrency wallet addresses could transact with an account. Subaccounts gave multiple users access to the same parent account with customizable permission levels and withdrawal capabilities. Read-only privileges allowed a user to view historical activity but not make any trades.
It used real-time, anti-money laundering compliance services to monitor user activity and notify account owners for further verification when large deposits and unusual transactions were detected. Customers had to verify identities through a Know Your Customer (KYC) process to obtain full trading, deposit, and withdrawal functionalities.
For hot and cold wallets underpinning all exchange assets, FTX claimed it had multiple layers of security oversight and that losses resulting from system-wide outages and hacks could be offset with a FTX Backstop Liquidity Fund said to be worth approximately $200 million.
FTX Products and Trading Pairs
It offered a comprehensive range of order types and easy-to-use desktop and mobile trading apps for cryptocurrency investors of all skill levels across key products, including spot markets, options and futures contracts, leveraged tokens, and MOVE. Retail and institutional investors could tap into basic market orders and complex trailing stop orders for hundreds of cryptocurrency trading pairs such as BTC/USDT, ETH/USDT, XRP/USDT, and FTX’s native exchange token FTT/USDT.
- Futures: Traders could take both long and short bets, capitalizing on small price movements on leading cryptocurrencies using more than 100 quarterly and perpetual futures pairs with margins of up to 20x. Stablecoins, such as USD Coin (USDC) and True USD (TUSD), were used as collateral to open and maintain positions.1617
- Leveraged Tokens: It offered ERC20-based tokens that provided traders up to 3x leveraged exposure against the underlying trading pair. For instance, if a trader opened a BULL/USD – 3x long bitcoin token and bitcoin rallied 10% from the time of purchase, the leveraged token would gain 30%. FTX’s leveraged tokens had no margin requirement.
- Options: Traders could speculate on future price direction and hedge against their open positions with a range of call and put options that gave the holder the right but not the obligation to buy or sell at a future strike price.
- MOVE: These contracts allowed traders to bet how far the price of a cryptocurrency would move over a time period, irrespective of the direction, essentially making them a play on volatility. As long as the price of the underlying cryptocurrency moved over a specific dollar amount—either up or down—the contract generated a profit.
- Spot Markets: FTX offered more than 100 different spot trading pairs, providing exposure to leading cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), Chainlink (LINK), and XRP.
FTX US offered dozens of cryptocurrency spot trading pairs with fiat currencies, along with a marketplace for non-fungible tokens (NFTs).
While FTX US supported only the U.S. dollar, FTX served international customers and deposits and withdrawals via wire transfer in nine fiat currencies: the U.S. dollar (USD), euro (EUR), British pound (GBP), Australian dollar (AUD), Canadian dollar (CAD), Swiss franc (CHF), Brazilian real (BRL), Ghanaian cedi (GHS), and Argentine peso (ARS). FTX also had restricted usage for the Turkish lira (TRY) and Japanese yen (JPY) and promised functionality for the Hong Kong dollar (HKD), Singapore dollar (SPD), and South African rand (ZAR).
FTX Token (FTT) Tokenomics
There are a total of 350,000,000 FTT tokens. The current circulating supply is 170,923,766 FTT. 13,171,373 FTT tokens are burned and 64,862 FTT are yet to be burned. For the updated stats, visit this link.
FTX Token (FTT) Price
FTX Token (FTT) is now trading at $66.02, as of Sept. 6, 2021. Its 24-hour trading volume on exchanges is around USD $686,727,101.56.
Is FTX token a good investment?
It has swiftly become one of the world’s most popular cryptocurrency trading platforms. And it has a lot of utility in the FTX ecosystem, and that this utility should keep the token in high demand. A benefit of the FTT token is that, because of its socialised profits concept, it might become a passive income source. If those socialised gains become a reality, there could be a huge demand for FTT in the future.
But as the crypto financial experts will always say when this type question is being presented to them, they will always reply with ‘DYOR’ which means ‘Do Your Own Research’. Do Your Own Research (DYOR) is a popular slogan among cryptocurrency aficionados. The acronym, on the other hand, isn’t specific to the cryptocurrency world only and it’s often utilised on the internet because of how quickly and readily misinformation can spread.
Learn More: https://gemini.google.com/app
FTX Fees, Limits, and Payment Methods
It competitive futures and spot markets trading fees ranged from 0.04% to 0.07% for market takers, based on the maker and taker model. Leveraged tokens carried a creation and redemption fee of 0.10% and a daily management fee of 0.03%.
It didn’t charge deposit or withdrawal fees for most crypto assets. All bitcoin withdrawals greater than 0.01 bitcoin were free, as was one withdrawal of less than 0.01 bitcoin per day. Smaller follow-on bitcoin withdrawals were charged a 0.1% fee. Fiat currency withdrawals valued at more than $5,000 were free, as was one withdrawal per week below that amount.
FTX US trading fees for market takers ranged from 0.05% to 0.2%.23 Fiat currency deposits could be made via wire transfer, ACH, debit or credit card, and Silvergate Bank’s Silvergate Exchange Network, and all of these methods (except for debit and credit cards) could be used to withdraw fiat currency.
FTX wire transfer withdrawals over $5,000 were free. One withdrawal per week below that amount was also free, but subsequent wires incurred a $25 fee. There were no deposit fees for blockchain transfers. FTX and FTX US paid the withdrawal blockchain fees for all tokens except ERC20/ETH and small bitcoin withdrawals.
Non-fungible token fees varied on FTX and the location of the trade. For FTX US users, listing an NFT using its self-service tool cost $1, and each sale or trade charged 2% to the seller. The non-US FTX platform charged 5% fees to the buyer and seller on each side of the trade.
Customers with complete verification privileges were limited to single deposits of $20,000 and ACH deposits of up to $50,000 per 10-day rolling period without daily or lifetime withdrawal limits. Customers with fewer verification privileges were limited to single deposits of $2,999, ACH deposits of $500 for any rolling 10-day period, and a lifetime limit on withdrawals of $300,000.
Conclusion
FTX is a crypto exchange that specializes in spot markets, futures, options, and more such derivative products. It was founded by an MIT graduate and trades in over 100 cryptocurrency pairs. The native token of the crypto exchange is called the FTT token. It can be used for collateral for future trades and trading fee discounts over to holders.
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