Over the years, we witnessed the rise of a lot of crypto exchanges that allow investors to buy, sell or exchange cryptocurrencies. There are two types of crypto exchanges: centralized and decentralized. While both of them have very specific use cases there are limited features associated with centralized exchanges. Most of them only allow fiat to crypto trading pairs with spot trading features. However, there is a centralized crypto exchange that offers a wide range of features like options, futures, etc. This crypto exchange is called FTX exchange. Let’s understand what FTX is and how it works!
So, What is FTX (FTT)?
FTX is a cryptocurrency exchange launched in 2019 that specializes in derivatives. There are two entities of FTX: Bahamas-based FTX and its FTX US affiliate. Both entities have overlapping management teams but different capital management. Furthermore, US residents can only trade through FTX US.
The FTX platform offers a wide range of trading products including derivatives such as options and future, volatility products and leveraged tokens. Moreover, the exchange provides trading opportunities in the spot market for over 100 cryptocurrency trading pairs such as BTC/USDT, ETH/USDT, XRP/USDT etc. The FTX platform also has an over-the-counter desk that trades around $30 million per day without any fees.
FTX was founded by MIT graduate and former Jane Street Capital international exchange-traded funds trader Sam Bankman-Fried. The crypto exchange is backed by Alameda Research, a trading firm that accounts for around $1 Billion of volume in a day.
How does FTX work?
The FTX ecosystem was designed to prevent clawbacks. A clawback is when a party can not repay on time so the lender takes the money back with penalties. FTX uses a three-tiered liquidation model to ensure liquidity and prevent clawbacks. The model also closes positions with a rate-limited order and maintains an insurance fund to prevent customer losses. The FTX ecosystem also maintains collateral that is sharded in one universal stablecoin wallet. The platform also allows taking leveraged positions with margins or futures. Instead, the platform uses leveraged tokens that mimic leveraged trading experiences.
The FTX ecosystem provides the following key products:
Futures:
Traders can take either a long position or a short position bet on a cryptocurrency pair. The margins rise up to 101x and stablecoins such as USDT are used for collateral.
Leveraged Tokens:
FTX offers ERC20-based tokens that allow traders to open 3X leveraged exposure against the underlying trading pair. These tokens can be used without any margin requirement.
Options:
Traders can speculate on the future price of a pair and hedge against their open positions using call or put options.
MOVE:
Moves are contracts that allow traders to bet how far the price of a cryptocurrency will move over a certain period of time, irrespective of the direction. As long as the price moves you earn money.
Spot Markets:
The FTX platform offers over 100 different spot trading pairs of the most commonly known cryptocurrencies such as Bitcoin, Ethereum, Binance Coin, Chainlink, and Ripple’s XRP.
The FTX token: A snapshot
The native token of the FTX platform is the FTX token. The token has a lot of use cases on the platform for instance increasing network effects. It can be used for collateral on leveraged (futures) trades. FTT token holders also become eligible for a portion of net insurance fund gains used to prevent customer losses. The token is also used to give users trading fee discounts along with over the counter rebates on their holding of FTT in a tiered system. The FTT token is used for maintaining inflation within the platform by repurchasing and burning tokens until half the token supply is destroyed. Moreover, FTT can also be used to sell white-label versions of over the counter portals that can be used by institutions.
Knowing what you know now about the — token, We are sure you are wondering, “Where to buy FTT token from?”. Now, you can buy the FTT token with Zebpay.
Conclusion
FTX is a crypto exchange that specializes in spot markets, futures, options, and more such derivative products. It was founded by an MIT graduate and trades in over 100 cryptocurrency pairs. The native token of the crypto exchange is called the FTT token. It can be used for collateral for future trades and trading fee discounts over to holders. You can now buy the FTT token on Zebpay crypto exchange platform!
