FTX, over the past few years, has grown to become one of the world’s largest and most prestigious centralized digital asset exchanges. The exchange was founded in 2018, with its headquarters in Hong Kong. FTX exchange offers various virtual derivatives, including options trading, volatility products, and digital currencies.
The exchange also provides spot features for more than 300 crypto trading pairs. Examples of trading pairs available on the online derivative issuer include BTC/USDT, ETH/USDT, and SOL/USDT. In addition, the exchange also has its native virtual currency, known as FTT.
FTX US Exchange
FTX US is an affiliate of the parent Bahamas-based FTX exchange. FTX US is the company’s version operating within the jurisdiction of the United States. FTX US has its headquarters based in Berkeley, California. The U.S. version of FTX was set up to offer crypto derivative services only in the U.S. market. FTX’s decision to set up FTX US shows that the exchange is following regulations and playing by the rules and regulations set up by the Securities and Exchange Commission.
An In-Depth Overview of FTX Exchange
FTX (both the Bahamas and U.S.-based entities) offer online digital asset services and products for their users. The mobile and web platforms have a very easy-to-use inter-phase. The interphase attracts seasoned crypto and blockchain investors of all levels of expertise. Besides offering crypto derivatives, the exchange supports nine government-issued fiat currencies, including the U.S. Dollar, Brazilian Real, Ghanaian Cedi, and Swiss francs.
FTX Products and Services
Being a crypto derivative issuer, the exchange uniquely offers industry-standard products and services. Some of the most common effects include futures, leveraged tokens, options and spot market offers.
FTX Futures
Crypto futures is a form of trading that relates directly to futures trading in mainstream markets such as Forex, Commodities and precious metals. The trading method allows users to trade crypto derivatives using futures contracts to trade crypto-asset products. FTX exchange will enable consumers to buy or sell contracted bets on prominent cryptocurrencies. The exchange offers more than 100 quarterly and perpetual futures crypto pairs. FTX, through the futures service provision, also gives traders a chance to trade cryptocurrencies with margins of up to 101X.
During the perpetual and quarterly futures trading, FTX allows traders to use stablecoins such as USDT as collateral for their trades when opening or closing futures positions. FTX has listed numerous coins on its futures platform, which include BTC, ETH, EOS, XRP and USDT. Through future service, traders can make money regardless of market direction.
Leveraged Tokens
A leveraged token is a fund that keeps up with cryptocurrencies’ price movements, including P&L. The ERC20-based tokens offered by FTX give traders up to three times the leveraged exposure to the essential trading pair. For instance, the leveraged token would increase in value by 30% if a trader opened a BULL/USD – 3x long position in Bitcoin and the price of Bitcoin rose 10% after the purchase. The leveraged coins offered by FTX don’t require any margin.
Options Trading
Trading in cryptocurrency options is a common investing strategy. The trading activity entails purchasing and selling contracts. Each agreement gives the holder the right to buy or sell a particular asset on a specific day for a certain price. Options trading involves a variety of call-and-put options, which grant the holder the right but not the duty, to purchase or sell at a future strike price; traders can make predictions about the direction of future costs and protect themselves against open positions.
MOVE Contracts
MOVE contracts, which are essentially a play on volatility, let traders wager on how far the price of a cryptocurrency will fluctuate over a specified period, regardless of the direction. The contract makes money as the price of the underlying cryptocurrency increases or decreases by more than a specific dollar amount. The centralized exchange also offers this feature.
Spot Market
FTX exposes popular digital assets like Bitcoin, Ethereum, Binance Coin, Chainlink, and Ripple’s XRP through its more than 100 spot trading pairs.
Nearly 60 cryptocurrencies, spot trading pairings, cryptocurrency swaps, and Bitcoin mini futures are all available on FTX US. Options contracts denominated in 0.01 Bitcoin and 0.1 Ether are also available. Additionally, it runs a market for Digital Art Pieces commonly known as Non-Fungible Tokens.
Liquidation Engine
FTX’s particular liquidation engine and backup liquidity provider network system offers a three-step approach to handle margin calls and avoid clawbacks.
Collateralized Centralized Wallet
FTX offers a centralized crypto derivative wallet, unlike other derivative exchanges. The wallet platform on the exchange is quick and easy.
FTX Regulations
After shifting from Hong Kong in September 2021, FTX was incorporated in Antigua & Barbuda and had its corporate headquarters in the Bahamas. The Bahamas Securities Commission oversees its division FTX Digital Markets Ltd. Residents of the United States cannot use the exchange’s services hence the establishment of FTX US.
FTX Security
FTX offers risk management capabilities in three key areas: personal accounts, exchanges, and additional security. This makes the exchange more secure from malicious attacks.
Security of Personal Accounts
Password Character Restrictions
The business requires a combination that complies with complicated character restrictions to register an FTX account. Additionally, it looks for predictable patterns in password requests; any accounts that don’t comply cannot register.
2FA Security
Furthermore, FTX mandates that users set up two-factor authentication (2FA), which clients should always enable. All withdrawals need the completion of 2FA. FTX locks withdrawals from an account if the account’s password is changed or the 2FA contact information is removed.
Frequent Monitoring
FTX keeps an eye on user activities and searches for irregularities and abnormalities. If FTX notices an unusual log-in attempt, it will alert the account owner so that they can confirm the log-in attempt, mostly prompting an email address.
Exchange Protection
To find possibly nefarious trade behavior, FTX hires Chainanalysis. Chainanalysis is a real-time compliance tool for anti-money laundering that keeps an eye out for significant deposits or odd activities.
To ensure that liquid assets are available to enable trade, FTX additionally oversees an FTX Backstop Liquidity Fund. The liquidity fund balance of FTX was about $200 million as of September 2022.
Additional Security Measures
In FTX exchange, subaccounts are a tool that users can utilize to generate unique log-ins. Multiple users can access the same account simultaneously, thanks to subaccounts, but each user will have variable permission levels. Every log-in can be set to read-only (cannot make any trades but can view historical activity). Additionally, the ability to withdraw money can vary between various log-ins.
Users of FTX can also specify security restrictions for wallet addresses or internet protocols (I.P.s). This ensures that only particular internet addresses or digital wallets can carry out transactions related to a specific account.
FTX Management Teams
There are overlaps in the management teams of FTX and FTX US. Sam Bankman-Fried is listed as the chief executive officer of both businesses, and co-founder Gary Wang is listed as the chief technology officer.
At the beginning of 2022, FTX closed a $400 million series C venture capital fundraising round. After the fundraising ended, the firm’s value was estimated at $32 billion. Temasek, Paradigm, the Ontario Teachers’ Pension Plan Board, NEA, IVP, SoftBank Vision Fund 2, Lightspeed Venture Partners, Steadview Capital, Tiger Global, and Insight Partners were some of the investors who took part. A series A investment round for FTX US, valued at $8 billion, was concurrently participated in by all investors in that funding round.
The Advantages and Disadvantages of FTX Exchange
Advantages of FTX
Comparatively speaking to other cryptocurrency exchanges, FTX offers fair trading fees. The exchange also brags about its mobile app, sophisticated trading features, and trading options for various coins and tokens.
FTX also offers rewards based on the volume exchanged as part of its premium program. For instance, taker costs for entities with a VIP 1 classification and a total volume of 0.1% of the exchange volume are 0.0375%. This could go better with VIP7, which lowers taker fees to 0.025 percent (with a total volume of 2.5% of exchange volume). For market makers, there is a comparable tier structure.
When these entities hold FTT, there are further advantages. Holding $10,000 worth of FTT results in a 15% fee savings while having $100,000 worth of FTT results in a 25% discount.
Users can get a unique affiliate link from FTX. Depending on the amount of FTT staked, the referring user receives between 25% and 40% of the new user’s fees when they sign up using that affiliate link. They will also receive 5% of their fees returned. Additionally, FTX retains the ability to pay users extra remuneration following other criteria, the volume of referrals they make, or both.
Disadvantages of FTX Exchange
The exchange could have many drawbacks. FTX encourages its customers to submit support tickets for assistance; for those who would like more one-on-one interaction, such as live chat support, other exchanges might be more appropriate. Additionally, U.S. citizens are not permitted to use the FTX worldwide platform. Instead, due to regulatory requirements, Americans must use FTX US.
FTX provides a wide variety of trading items, although some newcomers to the market could find the interface or options confusing. While it might not be the best choice for novice traders, FTX is frequently seen as a top alternative for more seasoned traders. Although FTX advertises cheap trading fees, competing exchanges often provide lower rates.
How safe is FTX Exchange in General?
Many crypto enthusiasts will brag about how secure FTX is. Furthermore, FTX has not been the target of any known hacks or public breaches. However, as with many centralized exchanges, storing bitcoins in cold wallets, where users retain sole custody of their private keys, is the safest option.
Final Thoughts
Users can buy, sell, and enter derivative contracts for coins and tokens on the well-known cryptocurrency exchange FTX. Additionally, FTX encourages the sale of collectibles and NFT. Because of U.S. government restrictions on cryptocurrencies, the company offers dealers worldwide the chance to swap many digital currencies for comparatively little money.