FTX.com is an institutional-grade cryptocurrency derivatives exchange, established in May 2019 and based in Hong Kong. Built ‘by traders, for traders’, FTX has made its mark with several industry-first derivatives products.
In the short time since its launch, FTX has consistently been in the top-5 crypto derivatives exchanges by volume and has been given great reviews online. Our staff at Blokt personally use it and are big fans of it.
FTX is quickly becoming a favorite among professional crypto derivatives traders and retail traders alike. Blokt has also ranked it highly in our best cryptocurrency exchange guide.
So, what makes the FTX.com derivatives platform such a trusted and professional exchange? We’re going to find out in this complete FTX.com exchange review, and also show you how to get started opening an account, placing a trade, and walk you through the different types of derivatives contracts FTX.com offers.
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But first, we’re going to look at FTX’s history, and explore some of the different features available on FTX.com.
FTX Exchange Development
FTX.com was originally incubated and developed by Alameda Research, a quantitative trading firm established in 2017, who manage a $100 million portfolio of digital assets and are one of the top market makers for BitMEX, OKEx, and other derivatives exchanges.
Alameda Research was founded by Sam Bankman-Fried, previously a professional trader for Jane Street Capital’s international ETF desk; and Gary Wang, an ex-Google developer. Together, they formed a highly professional team of trading and crypto experts who helped to create the FTX platform.
Gaining notoriety for their advanced trading products and industry-first derivatives contracts, FTX.com really began to stand out from the rest of the crypto derivatives market in August 2019, when it was announced that they had raised $8 million in funding from several serious institutional venture capital companies.
In February, FTX announced that it would be holding a fund-raising round through an equity-backed token sale, where investors could buy FTX_Equity tokens, with a minimum buy-in of $250,000 – or 125,000 FTX_Equity tokens. In total, FTX valued themselves at $1 billion through the token sale.
Strategic Partnership With Binance
In December 2019, leading cryptocurrency exchange Binance invested a large sum into FTX, in a bid to own a large equity stake in FTX.com. Although the final sum was undisclosed, the multi-million dollar deal is a testament to the quality of the FTX.com platform and trading infrastructure.
In a press release, FTX stated that the investment by Binance was the first outside investment directly into Alameda Research, and the two teams would be working closely together to build better trading products and develop more robust exchange platforms.
Speaking to Coindesk in December, Changpeng Zhao, known as ‘CZ’ in the crypto space, said of the partnership:
“The FTX team has built an innovative crypto trading platform with stunning growth. We see quite a bit of ourselves in the FTX team and believe in their potential in becoming a major player in the crypto derivatives markets.”
The partnership will also be working on new initiatives which the FTX team have said will be announced soon.
FTX.com Trading Products
The FTX exchange features a large range of trading instruments and products, some of which are totally unique to FTX.com, developed and launched by the FTX team.
The FTX exchange is mostly a derivatives exchange, which means that users don’t actually trade the underlying assets (There are a few spot markets). Rather, in most of FTX’s trading products, users will be trading a ‘contract’ of the underlying asset, or buying a token which represents another asset or fund.
The Alameda Research and FTX team have created some of the most innovative and unique trading products on the market, so let’s explore them in detail below.
FTX Futures
Futures are a trading instrument which gives a buyer an obligation to purchase a specific asset at a future date, or a seller to deliver an asset at an agreed future date. In cryptocurrency, futures are commonly used to trade assets with leverage, which means borrowing capital to increase your position size.
Trading with leverage increases the potential profit from a trade, but it can also magnify losses. FTX.com allows traders to utilize up to 101x leverage on most of their futures contracts.
Bitmex allows 100x and Binance up to 125x. But as we have said before, if your interested in leverage that big then you might as well just try your luck in a bitcoin casino instead, as your basically gambling.
FTX’s perpetual futures are available for many of the top cryptocurrencies by market cap, including Bitcoin, Ethereum, Ripple, and Litecoin; but also with many other crypto assets such as Chainlink, Bitcoin SV, Tezos, and EOS.
The inclusion of futures for lower market cap and lesser known crypto assets by FTX is a smart move, which has attracted many more users to their platform. For the majority of these assets, futures contracts aren’t available anywhere else.
To compare FTX with BitMEX, one of the other leading perpetual futures exchanges, BitMEX only have contracts for 8 different assets, whereas FTX has futures contracts for over 25 assets, as well as a collection of index funds.
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FTX Options
FTX also offers European-style options contracts for Bitcoin, which cash-expire in USD. Options contracts give traders the right, but not an obligation, to purchase or sell an underlying asset at a predetermined price, on a set date. Options contracts can be opened as either a call or a put, which is ‘right to buy’ (bullish) and ‘right to sell’ (bearish) respectively.
For example, if a trader opens a call for BTC at a $7,000 strike price, but the price reaches $7,100 by the time the contract expires, the trader would have a right to buy $7,100 worth of BTC for $7,000. This options position would cash settle at $100.
Like futures contracts, users can trade long or short with leverage on options contracts. FTX’s options are highly customizable, with users able to set any combination of strike price and expiration time at contract open.
Once a trader has set their options up, they can request a quote from FTX, who will generate a bid or offer for the option contract in just 10 seconds. Traders can either accept the options contract, or choose not to trade.
Leveraged Tokens (BULL & BEAR)
A unique trading instrument to FTX, leveraged tokens are a trading instrument which allows users to buy a token using USD that tracks the price of an underlying position on a digital asset.
This sounds complex at first, but an easy example is their ADABULL token, which is a 3x long Cardano token. This is a minted ERC20 token which represents a 3x leveraged basket of ADA futures. By buying the ADABULL token, traders are able to easily long or short an underlying digital asset – including a large variety of altcoins as you can see in the screenshot below.
Leveraged tokens which are a 3x BULL token will move each day around 3 times the value of the underlying asset, and vice versa for a BEAR token. This means that over a long time period, buying a BULL or BEAR token can outperform the underlying asset itself.
These tokens represent a simple way for traders to open a position with automated leverage. Each BULL or BEAR token automatically rebalances itself throughout the day to maintain it’s target leverage, which reduces the likelihood of liquidation. This would require time and effort on the traders part to maintain themselves.
FTX believes that letting traders access leveraged tokens will reduce the time they take micromanaging their risk or collateral, and as they are standalone ERC20 tokens, each BULL or BEAR token can be withdrawn from FTX and traded elsewhere or transferred peer-to-peer.
FTX MOVE
Another industry-first trading product developed by FTX are their ‘MOVE’ contracts. As the name suggests, MOVE contracts represent the amount that an underlying asset moves in a set trading period.
For example, if Bitcoin starts trading at the start of the day at $7,000, and closes the day at $7,100, the MOVE contract would expire at $100. Opening a long position on a MOVE contract will pay out for a trader if BTC moves significantly in the day following the contract open, whereas opening a short position will pay out if BTC remains fairly stable.
MOVE contracts can also be opened with leverage, like other futures contracts.
FTX.com offer three types of MOVE contracts, including:
- Daily – These MOVE contracts expire after just one day, making them an interesting trading product for day traders who like positions closed by the end of the day.
- Weekly – Weekly MOVE contracts expire within a 7 day period, although this doesn’t necessarily correspond to a calendar week.
- Quarterly – The Quarterly MOVE contracts expire roughly every 3 month period, which is well suited to long-term traders.
There isn’t any other trading product similar to MOVE contracts available to crypto traders at present, and the feature has brought in a large number of users to the exchange.
Prediction Markets & President 2020 Contracts
Prediction markets, much like traditional betting, can use the outcome of any real-world event to speculate and place a trade. The difference between trading on a standard asset and a prediction market is that a prediction market is a form of ‘binary option’, and the contract either settles at 0% or 100% – in other words, ‘win or lose’.
One of the most popular prediction markets that FTX.com offers are presidential contracts called ‘President 2020’ – in other words, placing a trade according to who will win the upcoming 2020 US presidential elections.
Each presidential candidate has their own contract. If a candidate wins, their contract will expire to $1 each. If they lose, the contract will expire to $0. Naturally, there can only be one winner, and some candidates are more likely to win than others – which affects the current buy-in price of their President 2020 contract. Traders can long or short each contract.
Traders can choose from the following options for President 2020 contracts:
- Donald Trump (TRUMP) – $0.51
- Bernie Sanders (BERNIE) – $0.002
- Michael Bloomberg (BLOOMBERG) – $0.005
- Pete Buttigied (PETE) – $0.001
- Elizabeth Warren (WARREN) – $0.004
- Joe Biden (BIDEN) – $0.43
As you can see from the current prices at the time of writing, Michael Bloomberg’s buy-in price is virtually zero, following his resignation from the presidential race. As you can see by price, Trump and Biden are currently trader’s two favorites for the presidential race.
The President 2020 and other upcoming predictions markets by FTX.com are an interesting new trading idea by the FTX team, which both FTX and the wider crypto community are predicting will grow into a highly popular trading instrument over the next few months.
‘Shitcoin’ Perpetual Futures
A tongue-in-cheek basket of 50 so-called ‘shitcoins’, the SHIT-PERP is an index of low market-cap coins, with prices quoted as a weighted average of the underlying token prices.
The somewhat controversial index includes the likes of Waves, Verge, and Nano, among other well-known projects, which Alameda Research have classed as being low market-cap, and with ‘one future’ – presumably heading towards zero.
Regardless of the constituent coins of the SHIT-PERP index, it’s a novel and interesting way for traders to short or long a large part of the alt market via FTX.com; and a similar trading instrument which is so candid about its constituent assets doesn’t exist elsewhere in the crypto market.
It’s proven quite popular too – according to CoinGecko, the fund has had $650,000 trading volume in the last 24 hours at the time of writing.
OTC Desk
If you’re a professional trader looking to buy a large amount of digital assets, it may suit your needs to buy ‘over the counter’, or ‘OTC’. Most exchanges offer OTC trading, however FTX.com’s institutional trading infrastructure makes them particularly well-suited to executing OTC trades.
The best bit about FTX’s OTC market is that there’s zero fees outside the spread. Users can request OTC quotes, which often provide preferential rates due to the volume of assets being traded, by visiting FTX’s OTC Quote portal.
FTX.com Liquidation Engine
Liquidation sometimes occurs on leveraged trades, common in derivatives contracts, and takes place when a trader’s account goes beyond bankruptcy. This normally happens when the market moves rapidly, such as a massive sell-off.
In simple terms, this means that the market has moved against a trader’s position so significantly that their initial margin – the funds they used to borrow trading leverage – is forfeit and their account has a negative net asset value.
As this negative net asset value needs to be paid, other traders open positions which are close to their liquidation point may also be closed. This can also be called auto-deleveraging, clawbacks, or socialized losses.
To make this process fair, exchanges use liquidation engines that close positions while minimizing the market impact. However, not all liquidation engines are created equally.
FTX have built their liquidation engine from scratch, and it uses intelligent and efficient values to decide the liquidation process.
FTX’s liquidation engine sends traders reasonable and volume-limited liquidation warnings to gradually close positions that drop below their maintenance margin of 4.5%.
This prevents the likelihood of clawbacks, although in the event of high market volatility, they are still possible. Users should keep an eye on their estimated liquidation price, which FTX shows in the information box to the right-hand side of the trading view (shown to the left).
You can reduce your likelihood of liquidation by trading with lower leverage and always use a stop loss!
The FTT Token
FTT is an ecosystem token, similar to BNB for Binance, specifically developed for FTX.com and their trading products. FTT holders have access to certain perks on the FTX exchange, including:
- Weekly buying and burning of fees
- Lower FTX trading fees
- Collateral for futures trading
- Socialized gains from the insurance fund
There is a lower fee structure for FTT holders, which we’ll look at in our fee section below. Eventually, FTX will burn at least half of all FTT tokens, including any FTT tokens which are used to pay fees on the exchange, creating a scarce supply.
The FTX team have said that the FTT token is modelled after BNB, and FTT is currently the in the top 50 cryptocurrencies by market cap according to CMC.
Sign Up to FTX.com
Now we’ve explored the features of FTX.com, let’s discover how you can start using the platform. To start trading on FTX.com, you’ll first need to create an account.
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The sign-up process is very easy, and to open an account you only need to provide your email address, and create a password. Once you’ve confirmed your email, you can start using FTX.com.
Know your customer, or ‘KYC’, isn’t essential to trade on FTX.com, but if you don’t complete it, you’ll be limited to withdrawing just $1,000.
We strongly recommend that you complete identity verification, as not only will you be able to withdraw more, it will also increase your account’s security.
To complete KYC, you’ll need a form of identification, such as a driver’s license or passport, and some proof of residence, like a bank statement or utility bill to verify your identity.
There are three tiers of KYC. If you only provide your email address, name, and country of residence, you can withdraw up to $2,000 per day at tier one. Providing a form of government-issued ID will give you unlimited withdrawals through tier two, and providing proof of address will allow you to make unlimited withdrawals and OTC fiat wire transfers, which is tier three verification.
Supported Jurisdictions
FTX currently supports users of most nationalities, excluding the following countries and jurisdictions:
- The United States
- Cuba
- North Korea
- Crimea
- Iran
- Syria
- Antigua & Barbuda
Traders from almost every other jurisdiction are free to sign-up and trade on the exchange, although some trading instruments may be limited to users from certain nations – for example, traders from the United Kingdom cannot currently trade President 2020 contracts.
Deposits
Making a deposit to FTX is easy. To credit your account with USD, you’ll first need to enable two factor authentication (2FA) on your account, using either SMS, Authy, or Google Authenticator. We recommend using a dedicated 2FA app for better security, which you can read more about in our complete 2FA guide.
Next, you’ll need to navigate to your account section by clicking on your username in the top-right of the exchange. Here, you can see a range of useful information such as your open positions, order history, profit net loss (PnL), and access the FTX referal scheme, but to make a deposit we need to click on ‘Wallet’.
Here, you’ll see a list of all the assets that trade on FTX.com, your balance, their value in USD, and a burger menu giving you the option to deposit, withdraw, or in some cases, convert. ‘Converting’ your assets is similar to atomic swap capabilities where you can instantly swap one asset for another that is supported on FTX.com.
Let’s use USD and BTC deposits as an example. To deposit USD, you can use one of five USD-backed stable coins. These include TrueUSD (TUSD), USD Coin (USDC), Paxos Standard (PAX), Binance USD (BUSD), or HUSD.
You’ll need to go through a crypto-fiat gateway to purchase a USD-backed stablecoin such as BUSD or USDC. You can get both on Binance for example, or USDC on coinbase.
Once you’ve bought some BUSD, select it from the USD stable coin list on FTX. You’ll see a lightbox appear with your deposit address, and the option to generate a QR-code address – particularly useful if you’re depositing from a smartphone.
Double check the address is correct, and send over your BUSD or other USD-backed stablecoin to this address, and your account will be credited! It’s that simple. For BTC and other cryptocurrency deposits on FTX, this process is exactly the same, however you also have the option to make a purchase for some crypto’s with a credit card.
Credit card purchases on FTX.com are processed through Simplex – just like on Binance – who settle the purchase externally and then send your BTC or crypto to your FTX.com account automatically. Simplex support most major credit cards.
Users should be aware that BTC and other crypto purchases through Simplex are not processed by FTX directly, and are subject to their own fees.
Fees
Like most derivatives platforms, FTX.com has a tiered fee structure depending on traded volume in USD. For the average user, maker fees will be 0.02%, while taker fees are 0.07%.
For professional traders, FTX.com has developed a VIP program. The VIP program has significantly lower fees for high volume traders, a dedicated account manager, and the opportunity to take part in market maker programs.
FTX has joined the likes of Binance in offering holders of FTT, their ecosystem token, a reduced fee structure. Many derivatives exchanges don’t currently offer an ecosystem token, which sets FTX apart from the likes of BitMEX or MonFEX.
Other fees associated with FTX.com include leveraged token creation and redemption fees, which are 0.1%. Likewise, users trading with leverage of 50x on futures contracts will incur increased trading fees of 0.02%, and 100x leverage increased trading fees by 0.03% – these extra funds are allocated to the insurance fund to be paid out in a liquidation event.
Withdrawing on FTX.com
You can’t withdraw straight to a bank account on FTX.com. Instead, you’ll need to either withdraw a USD stablecoin if you want a USD withdrawal, or withdraw a crypto asset to a wallet you control.
Just like depositing, you’ll simply click ‘withdraw’ next to your chosen asset, and a lightbox will appear where you can enter your wallet address. Make sure the wallet where you’re withdrawing funds supports the asset that you’re withdrawing!
Enter the amount you want to withdraw, then paste in your wallet address. You can save and name this wallet for easy access in the future. You’ll need to generate a 2FA code using the button at the bottom right of the lightbox, after which you can click withdraw.
How quickly the funds arrive in your wallet will depend on the block times of the asset you’re withdrawing.
The FTX Insurance Fund
The insurance fund is put in place to prevent customer losses in the case of a sudden and large market movement, which would likely quickly liquidate many open positions on the exchange.
Traders who make use of 50x – 100x leverage pay higher fees, which directly contribute to the insurance fund – this is due to their increased likelihood of liquidation. In the event of a failure of FTX’s liquidation engine, for example a sudden and unexpected drop in the price of BTC, the insurance fund would be used to pay traders whose positions had been unfairly closed at a loss.
Around 5% of non-FTX owned FTT tokens are also set aside in the unlikely event that the insurance fund runs out of money to pay customers. During periods of volatility when underlying markets make large moves, the FTX insurance fund has been shown to make a net gain.
The proceeds of these gains are distributed among FTT token holders, which FTX call ‘Socialized Gains’, adding another layer of utility to the FTT token.
Is FTX.com Secure?
FTX.com keeps users funds in safe custody while they are on the exchange, although it’s always recommended to keep your digital assets in a wallet which you control when you’re not actively trading.
FTX offers users two factor authentication to access accounts and make withdrawals from your wallet, which prevents unauthorized access of your funds by bad actors.
To ensure that services remain online and secure at all times, FTX works with security researchers to improve the security of their trading products and services. The FTX security policy claims that the FTX team works closely with the computer security community to respond to potential vulnerabilities on their exchange.
At the moment, FTX.com doesn’t have a dedicated section that details their security practices, like BitMEX. In FTX’s terms of service, they remind users that the exchange may experience ‘sophisticated cyber attacks’ that may cause operational issues and service interruptions.
That said, in the year since their release FTX has never experienced a security breach. But as we know from past events, even the best exchange can be hacked.
FTX.com Customer Service
With a dedicated chat service on their website, there’s usually an FTX representative ready and waiting to help you during normal business hours should you encounter an issue with the exchange.
Remember, as a Hong Kong-based exchange, business hours may be different for European traders. If a representative isn’t available to immediately answer your questions, FTX.com also has a huge tutorial and help desk section of their site.
Here, users can find guides on trading, fees, API integrations, and more.
Additional Info & Upcoming Features
FTX have plenty of secondary features which make their exchange experience one of the most enjoyable in crypto.
Their ‘Trollbox’ feature, similar to other leading platforms like BitMEX, is a fast-paced community live chat, where users can share ideas, chastise each other’s trading mishaps, or just troll to pass the time.
The ‘Quant Zone’ is another interesting upcoming feature of the FTX exchange. Still in development, the Quant Zone will be a dedicated part of FTX where users can build and share complex trading strategies. Traders will be able to build self-executing trading rules, set triggers, and specify actions to take when trading rules trigger.
There’s highly likely to be FTX.com mobile apps on the horizon too. Although there’s been no mention of this from the team, the FTX help desk portal includes links to ‘Mobile Apps‘, hinting that the team are working to provide on-the-go trading.
Lastly, although FTX.com don’t shout it from the rooftops, they also donate generously to charity. The exchange and its employees have donated over $10 million to date to important and effective charities, including The Humane League, OpenAI, and other charities.
Conclusion – Should You Trade on FTX.com?
The short answer is, yes.
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Even if you’re just a retail investor, the professional trading products you will have access to through FTX.com will not only enhance your trading experience and teach you valuable new skills, but it’s also one of the safest and best cryptocurrency derivatives exchanges in the world.
FTX’s guaranteed liquidity means that your trades will be placed reliably, and faster, than other derivatives platforms, and FTX’s huge range of new and innovative trading products are not just interesting to trade, but they also open up new opportunities even during slow market periods.
Binance’s investment into Alameda Research, and by proxy FTX.com, is a huge vote of confidence from one of the leading cryptocurrency exchanges. The investment shows to a large extent that FTX is a promising and trustworthy platform, which implies that good things are on the horizon for this emerging exchange.
Our Verdict
Overall, FTX.com is by far one of the most professional and advanced crypto derivatives exchanges in the cryptocurrency industry today.
One of the best features of FTX is the huge range of trading products available. Their MOVE contracts and President 2020 trading instruments aren’t available anywhere else, which provides an opportunity for traders to diversify their exposure away from the traditional crypto markets.
If you’re looking to trade on a crypto derivatives exchange with guaranteed liquidity, an advanced trading interface & underlying infrastructure, and high security, then FTX.com should be your first choice.
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FTX Exchange Review [2020] – The Complete Beginner’s Guide was originally found on Blokt – Privacy, Tech, Bitcoin, Blockchain & Cryptocurrency.
