FTX Exchange celebrated the first anniversary of its 2019 launch in May. This milestone capped off an impressive year of growth for the leveraged cryptocurrency trading platform.
Founded by crypto trading pros Sam Bankman-Fried (CEO) and Gary Wang (CTO), FTX bills itself as being "by traders for traders." By many measures, the FTX team seems to be living up to this motto.
Our FTX exchange review will fill you in on key details to help you evaluate if this new platform is a good fit for your portfolio.
FTX at a Glance
- Available Contracts: Futures and leveraged tokens
- Trading Fees: 0.02% maker, 0.07% taker
- Available Coins: 15 perpetual swaps, 45 leveraged tokens
- Platform Exclusives: OTC trading desk, FTX trading token (FTT), FTX MOVE Contracts
Background
Bankman-Fried and Wang set out to create an intuitive trading platform that offers innovative products you won't find on other exchanges. As the founders of powerhouse cryptocurrency quantitative, or "crypto quant," fund Alameda Research, the experienced trading duo was well-positioned for this undertaking.
Alameda has put up impressive numbers since launching in 2017. By the end of 2019, the firm had earned more than $60 million across its account roster. Two Alameda accounts remain on the top-10 list of the most successful traders by lifetime profits.
According to its website, Alameda manages over "$100 million in digital assets and trades $600 million to $1.5 billion per day across thousands of products: all major coins and altcoins, as well as their derivatives," which includes FTX.
As derivatives continue to draw a great deal of trading interest, especially in the cryptocurrency space, it can be challenging for newer platforms to thrive. A combination of unique product offerings and a solid trading background has helped propel FTX to early success.
Unique Features
FTX offers several exclusive products not available on other platforms.
FTX MOVE Contracts
These contracts represent the value the cryptocurrency has moved in a specific period - regardless of whether the value increases or not. Contracts choices include daily, weekly, or quarterly options.
On a long MOVE contract, traders win if the price of the BTC moves significantly in either direction during the control period.
On short MOVE contracts, traders come out ahead if the value of the cryptocurrency remains relatively stable.
FTX also offers a leverage long or short MOVE contract.
FTX Prediction Markets
Prediction markets are speculations on real-world events. Unlike similar products, FTX prediction market contracts settle at either 0% or 100% (in other words, they are win or lose).
The most popular FTX prediction market currently includes the President 2020 Contracts, where traders can bet on the 2020 US presidential election. For example, the TRUMP-2020 (TRUMP) contract (like the BIDEN-2020 contract) will expire to USD $1 if Donald Trump (or Joe Biden) wins the election in 2020. Otherwise, the contract will expire to USD $0.
Over-the-Counter (OTC) Trading
FTX offers its own OTC trading desk for traders who want to buy or sell large amounts of cryptocurrencies. The FTX OTC trading desk:
- Matches buyers and sellers, so cryptocurrencies are traded at an agreed-upon price and time, irrespective of value fluctuations
- Allows users to request quotations through the FTX OTC Portal
- Offers preferential rates for larger trade volumes
- Charges no fees outside the spread
FTX Token ($FTT)
FTT is FTX's own token. FTT holders can use tokens on the Exchange or trade it like an asset. Exchange benefits for FTT holders include:
- Lower trading fees
- Ability to use FTT as collateral for futures trading
- Getting socialized gains from the FTX insurance fund
- Ability to take advantage of FTX's token buyback and burning process
Getting Started with FTX
The process for getting set up with FTX is straightforward.
1. Sign-up and create an account
Enter your email address and create a password. Click Sign Up, and the site will automatically send you to the FTX homepage.
KYC (Know Your Client) Process
If you want to move more than $1,000 on FTX, you'll need to verify your identity with a KYC process. Click on the Wallet tab at the top of the page and then the Verify Identity button above the Balances section.
To verify your identity as an individual (and not as an institution), you'll need to provide some basic information and documentation:
- Full name
- Proof of address (like a bank statement or utility bill)
- Source of funds
- Scan of an official ID document
Once you've submitted everything, it should take the FTX team around 8 to twelve hours to perform a review.
Once approved, you'll have unrestricted access to your account.
Tip: It's a good idea to add two-factor authentication to any online account that involves your personal information and financial transactions. You can do this on the FTX platform within the Account tab.
2. Deposit funds
Again, this step is straightforward and quick.
Currency Support
FTX supports several currencies. Go to the Wallet section to start a deposit and select from several deposit options:
- TUSD
- USDC
- PAX
- Bitcoin and Bitcoin Cash
- Ether
- Tether
- Litecoin
- FTX-supported leveraged tokens
Click on Deposit. A window will open that shows your deposit address.
Make your deposit to the address and wait about 30 minutes for your balance to adjust.
3. Start trading
When your deposit clears, you can start placing trades. FTX gives you a few options here.
Perpetual Swaps
If you want to trade perpetual swaps, click on the Futures tab at the top of the page.
Leveraged Tokens
To trade leveraged tokens, you guessed it - click on the Tokens tab. You can trade 45 different leveraged tokens with FTX. The platform constructs tokens in a way that allows traders to benefit from leveraged exposure to a specific crypto asset on both the long and short side, without liquidation risk.
Examples of FTX leveraged token offerings include 3x Short TRX token, ETHHEDGE (1x short ETH), and LEOBULL (3x long LEO).
You're all set to trade at this point, though you should keep in mind a couple of details:
- If you're trading futures, the leverage adjusts automatically based on the number of purchased contracts.
- Leveraged tokens already have assigned leverage based on the purchased token (3x long, 3x short, or 1x short).
FTX Trading Fees
FTX operates on a tiered fee system based on a specific user's 30-day volume.
Futures and Spot Markets Maker and Taker Fees
- Lowest tier (under $3M in monthly volume): 0.02% (maker) and 0.07% (taker).
- Highest tier (over $100M in monthly volume): 0.01% (maker) and 0.025% (taker).
It is not uncommon for exchanges to offer lower fees to order makers to promote a more extensive order book. Remember, too, that you'll be charged a funding fee for perpetual contracts - the fee is given to the opposing contract holders (positive fund fees indicate that long positions will pay short holders).
Discounts
- FTX provides discounts to higher-volume traders and traders participating in its referral program.
- The FTX VIP program for professional traders and the Backstop Liquidity Provider program offers preferred rates, as well.
- FTT token-holders receive percentage discounts on trading fees based on the quality of FTT they hold. $10,000 FTT = 10% fee discount, $5,000,000 FTT = 30% fee discount.
Leveraged Token Fees
FTX charges 0.10% for creating or redeeming leveraged tokens, plus a 0.03% per day fee for managing them. Leverage increases corresponding trading fees:
- 50x leverage increases trading fees by 0.02%
- 100x leverage increases trading fees by 0.03%
Learn more about current FTX fees and discounts on the FTX site.
FTX Pros & Cons
With the caveat that every trading situation is unique and therefore, each trader must evaluate their own preferences, here are some potential pros and cons to keep in mind.
Pros
- Unique trading products you won't find on other exchanges
- Perpetual swaps for 15+ assets
- Derivatives trading expertise
- BTC and ETH options
- OTC trading desk that benefits large-asset traders
- Tradeable altcoin
Cons
- The relative newness of the exchange may concern some traders (but balanced against Alameda's experience, this may not be a significant concern for many).
- The FTX platform user interface is not particularly intuitive, though you can find what you need without too much hunting.
- Relatively little information is available about FTX's approach to security (but again, traders will want to balance this against the Alameda team's lengthy and impressive track record)
- Traders in major countries, including the US, cannot use FTX. Other countries restricted from FTX include Antigua, Barbuda, Crimea, Cuba, North Korea, Sevastopol, and Syria.
Key Takeaways
As you evaluate FTX, remember to weigh the platform's status as a newcomer against the founders' extensive backgrounds. FTX partners with several key cryptocurrency players, including Circle, True USD, and FBG Capital. Each of these firms has earned respect as safe trading partners who have conducted many millions of transactions.
Next Steps
Trade better with HaasOnline FTX trading bots. It's quick and easy to set up, and you'll never need to grant account permissions to take advantage of automated trading on FTX. HaasOnline has pricing plans to fit new as well as well-seasoned traders.
FTX Review originally published on HaasScripts on February 8, 2021.