FTX, the exchange founded and run by crypto fan favorite, Sam Bankman-Fried, was already a popular crypto startup among enthusiasts.
However, FTX has been the subject of even more attention following its recent investment into Chipper Cash, part of a team of series C investors that poured $150 million in the African fintech, valuing it at $2 billion.
FTX is also notable because of its continued drive for growth, one that has utilized heavy sports marketing, affiliating itself with brands such as the NBA, Formula One, the Superbowl, and ICC.
The marketing, the charismatic founder, and the sheer number of its interests can make it hard to figure out what exactly the company does.
Services Offered by FTX
FTX was launched in May 2019, endorsed by Alameda Research – a renowned quantitative cryptocurrency trading firm, that brings in the Wall Street acumen of founder Bankman-Fried. The platform describes itself as a cryptocurrency exchange built by traders, for traders.
FTX is primarily a cryptocurrency derivatives exchange. This means traders do not deal in real assets, instead, trading derivative products which reflect the value of the underlying asset. This could be in terms of contracts or tokens that represent the price of the asset.
FTX features an extensive array of tradable instruments, some of which are entirely unique to the exchange.
Here are the markets in more detail:
Futures are derivative instruments that obligate the associated parties to trade an asset at a pre-arranged date and price.
Trading in cryptocurrency futures also invites the benefits of leverage. On FTX, you can apply leverage of up to 101x on most of the platform’s derivatives contracts.
FTX has included futures for lesser-known cryptocurrencies with low market caps, supporting over 80 cryptos. The majority of these digital assets cannot be traded via futures contracts on any other exchanges, which has attracted a unique set of traders and speculators to the FTX platform.
To give comparison, while FTX supports futures for over 80 cryptos, BitMEX, one of the leading cryptocurrency exchanges for derivatives trading, has futures contracts available for only 13 different digital coins.
FTX also allows perpetual futures, a class of futures contracts that do not expire. Instead, the price of perpetual futures is updated every hour to keep pace with the value of the underlying asset.
Options are derivatives that are similar to futures. The main difference is that it is not mandatory for the contract holder to purchase the underlying asset on expiry.
Instead, options give you the right but not the obligation to proceed with the asset purchase.
Currently, only Bitcoin options are supported on FTX. Traders can design their own options contract and request a quote on the exchange, upon which FTX gives an offer.
Once an offer is available (usually in 5 seconds), a trader decides whether to accept this offer or choose not to trade.
Leveraged tokens are financial instruments unique to FTX. They are ERC20 assets that reflect the real-world price of the underlying digital coin.
For instance, BULLUSD is a 3x long BTC token – meaning, for every 1% BTC goes up in a day, the instrument increases in value by 3%.
If BTC goes down 1%, the value of BULLUSD will also go down by 3% and so on.
FTX currently has four types of leveraged tokens available:
- BULL is +3x
- BEAR is -3x
- HEGDE is -1x
- HALF is +0.50x
MOVE contracts are yet another unique volatility product available on FTX. These contracts represent the amount that an asset moves in a set period of time.
For instance, if ETH moves $100 over a 1-day period, the MOVE contract will be valued at $100.
Traders can open a long position on a MOVE contract if they think the asset will move significantly in either direction.
On the other hand, you can open a short position if you think the asset will remain relatively stable.
MOVE contracts are offered for three different trading periods:
- Daily – They expire after a single moving day
- Weekly – These MOVE contracts expire within a seven-day period
- Quarterly – These contracts run on a three-month duration
Similar to other tradable assets we have discussed thus far in this FTX review, MOVE contracts can also be traded with leverage.
Though FTX focuses on derivatives, the platform is also home to a large selection of cryptocurrency spot markets. Here, you will be trading the real asset and not a financial instrument that holds the underlying value of the asset.
At the moment, FTX features spot markets for nearly 70 cryptocurrencies.
Prediction markets work more or less like a traditional ‘betting’ set up. Instead of a financial asset, you will be speculating on the possible outcome of a real-world event.
If your prediction comes to fruition, you stand to make a profit. If your prediction is wrong, you will lose your stake.
For example, FTX launched a prediction market from the presidential election whereby traders could make trades on contracts such as TRUMP, BIDEN and BERNIE.
FTX OTC Desk
For institutional traders who want to invest in large amounts of digital assets, FTX has set up an OTC or ‘Over The Counter’ cryptocurrency exchange.
So, the exchange offers a range of products including derivatives trading, spot trading, and an OTC desk.
However the organization’s interests are vast, with a NFT product having been launched too.