FTX is a cryptocurrency derivatives exchange that offers futures, leveraged tokens and OTC trading. Currently, futures exchanges have many crippling flaws holding the space back. Their mission is to solve these problems and move the derivatives space toward becoming institutional grade.
They launched FTX in April and already have among the world’s most liquid orderbooks. FTX futures have traded more than $100m per day recently, and FTX OTC has traded another $30m. Their goal is to become as profitable as Bitmex and OKEx within a year.
They have received overwhelming support from top industry players who have reaffirmed the demand for a well designed derivatives exchange. In the future, they are planning to add options, exchange-traded tokens, lending, and spot margin trading to FTX.
- Web: https://ftx.com/
- Whitepaper: https://bit.ly/2YW92AD
- Coinmarketcap: https://coinmarketcap.com/currencies/ftx-token/
- Market Cap: $28,456,668 USD
- Circulating Supply: 25,000,000 FTT
- Total Supply: 349,704,264 FTT
- Price (06.10.2019): $1.14 USD
- Markets: https://coinmarketcap.com/currencies/ftx-token/#markets
- Price ICO: $0.80
FTT Top 100 Token Holders
They come from leading Wall Street quant funds and tech companies: Jane Street, Optiver, Susquehanna, Facebook and Google. They really familiar with traditional secondary market. They have backgrounds in equity derivatives trading; they know both how derivatives are traditionally designed, and what derivatives there is market demand for.
FTX is backed by Alameda Research. If you do not know who are they, they are $100million AUM quantitative cryptocurrency trading firm. Within a year, Alameda Research became the largest liquidity provider and market maker in the crypto space. Alameda trades $600 million to 1 billion a day, accounts for roughly 5% of global volume and is ranked 3rd on the BitMEX leaderboard.
In 2018 they launched an automated OTC RFQ system. In spite of the bear market and competitive OTC landscape, they were able to quickly scale their volume to $30 million per day without much marketing. Because they were able to offer some of the tightest spreads in the industry with fast settlement and no fees, they grew by word of mouth and became a source of liquidity for well known OTC desks and exchanges.
They also built a world class portal, with an intuitive UI and API, and an easy to use settlement system. They expect their volumes to grow substantially when they start their marketing efforts. The OTC portal has been integrated into the FTX ecosystem, driving their OTC counterparties toward FTX.
They’ve been one of the largest crypto futures traders for the past 1.5 years and found many problems with the top futures exchanges like Bitmex and Okex. Here’s what sets them apart:
- Clawback Prevention: A significant amount of customer funds on other derivatives exchanges has been claimed by socialized losses. FTX significantly reduces the likelihood of clawbacks ever occurring by using a three-tiered liquidation model.
- Centralized Collateral Pool + Universal Stablecoin Settlement: With existing futures exchanges, collateral is fragmented across many separate tokens and margin wallets. This makes it difficult for traders to rebalance and prevent positions from getting liquidated. To solve these issues, FTX derivatives are stablecoin-settled and require only one universal margin wallet.
- Innovative New Products:
Leveraged Tokens: These tokens allow traders to put on short or leveraged positions without having to margin trade. For instance, a trader who wants to 3x short Bitcoin can simply buy a 3x short Bitcoin leveraged token on FTX. Leveraged tokens are ERC-20 and can list on any spot exchange. We currently offer BTC, ETH, EOS, USDT, XRP, BNB, TRX, and LEO leveraged tokens:
Why FTX is Hard to Replicate?
FTX is backed by Alameda Research, a crypto trading thought leader and the largest liquidity provider in the secondary markets. Many of the following points rely on Alameda’s expertise, which makes them very hard for someone else to replicate:
- Live Product: Unlike many exchanges and projects who are conducting a token raise, their exchange is already live and actually functional.
- Liquidity: FTX is very liquid. It already has more liquidity than every other futures exchange in crypto; only the BitMEX BTC perpetual futures are more liquid than their FTX equivalent. This is really hard to replicate. No new exchanges will be able to do so, and those around for 5 years have only succeeded in doing so for a single contract.
- New Products: They are the first to launch USDT futures and leveraged tokens. There is a huge demand for these products, and we foresee them becoming very popular.
- Fast Development Cycle: FTX can leverage Alameda’s tech team — an experienced, battle-tested group used to building complex crypto trading systems under time pressure. This means that their development cycle is much shorter than others; they can roll out multiple large features per day.
- Strong Partnerships: Currently, they are partnered with USDC and TUSD. Because Alameda is an integral part of the secondary markets, they have strong connections with top exchanges, trading firms, OTC desks, etc. who we’ll be partnering with.
Exchange fees, trading fees from volume generated by leveraged token, and listing fees.
- First Tier: BitMEX, OKEx, and Bitflyer charge roughly 5bps/trade on roughly $1.5b per day of volume, making roughly $200m/year in revenue. BitMEX has a well-designed product with a large existing userbase but no marketing, and OKEx and Bitflyer have poorly designed products with large userbases and substantial outreach.
- Second Tier: Huobi DM is a recently launched product. It’s poorly-designed and didn’t have any foothold, but was able to leverage a large existing client base (Huobi). It now trades about $750m/day and generates about $100m/year in fees; it is also still growing.
- Third Tier: Deribit has a decent but rather vanilla product. Weak marketing is driving little liquidity and a small user base to their platform; their products trade about $50m/day and generate about $10m/year in fees.
I think that FTX will be the most well-thought out product among the field; be in the top tier of liquidity; have the most appealing products; have built-in flow from our large institutional counterparties; and have substantial room to innovate and grow over time. On the other hand, it currently does not have a large built-in retail user base.
Here’s a conservative estimate of their volume:
- OTC: Currently, Alameda Research OTC trades $30m/day. We are in the process of moving all these clients to FTX OTC.
- OTC Growth: With marketing, we expect our OTC volumes to double, adding another $30m/day.
- Crypto Trading Firms: We have been onboarding and getting very positive feedback from top crypto trading firms. We estimate we will get at least $10m/day of FTX volume from them.
- Leveraged Tokens: We will start listing leveraged tokens on other exchanges within the next month or two. We believe this will generate at least $10m/day of FTX volume.
Because of these factors, we can see good volume on FTX exchange. This will effect the price.
If we see a bull run like last quarter of 2017, we could probably see Global Total Market Cap of all cryptocurrencies rise from $300 Billions to over $1 Trillion ($1,000,000 M) and the value of some (good) coins will go to the moon. Remember that Market ATH was $800 Billions in mid January in 2018. In the long run, by 2020–2025 it is expected a multi trillion crypto market. Some people are predicting Bitcoin value $50,000 — $100,000 by 2021, and 6 months in crypto is like a few years in FX/Stock market. I believe there is a high probability of $1T+ and $50K+ Bitcoin before 2021.
FTT Token is one of the best coins out there, great fundamentals, great team, great partnerships… In case the alt coin bull market (it eventually will, sooner or later) FTX platform will have more volume which means increase in price. I think that a realistic — optimistic EOY 2019 price prediction for FTT is $3 — $5. We will also see announcements of new trading products like options, exchange-traded tokens, lending, and spot margin trading in FTX. It will definitely effect the price of FTT.
In addition, They have carefully designed incentive schemes to increase network effects and demand for FTT, and to decrease its circulating supply. They want to increase utility of FTT:
- Token Burn
One third of all fees generated on FTX will be used for an FTT repurchase, until at least half of all FTT is burned. Any FTT bought this way will be burned.
FTT can be used as collateral for futures positions. This increases utility and demand for FTT. The same applies when they launch margin trading in the future.
- Discount on Trading Fees
Customers who hold a certain amount of FTT for a period of time will receive lower FTX futures fees. This will further increase demand for FTT.
Sam Bankman Friedman has many things planned to make FTX.com one of the top exchanges and make the token grow in value. From my experience in cryptocurrency market, FTT Token looks undervalued at just $46M market cap and the potential to grow $10-$20 per token -or more- is realistic in 1–2 years time.
This is not a financial advice. Trade entirely at your own risk and do not forget to do your own research.
I hope this reading will help you to understand FTX.com and FTT. Thank you…