FTT is the exchange token of the cryptocurrency derivatives exchange FTX. It has multiple uses cases such as fee discounts in FTX, staking & earning interest, collateral, etc. The smart contracts of FTT are built on multiple ecosystems including Ethereum, Solana, Sora, Energi, and TomoChain.
FTT serves different functions in the FTX ecosystem. The most prominent ones are lower trading fees on the FTX exchange, various OTC discounts for token-holders, and its eligibility as collateral for derivatives trading. The FTX Token was launched privately on July 27 2019, with an initial supply of 350,000,000. Users earn trading fee savings and OTC refunds in a tiered scheme depending on their FTT holdings.
FTX is a cryptocurrency derivatives exchange launched in May, 2019 that offers futures and leveraged tokens on both individual and baskets of cryptoassets, over-the-counter (OTC) trading. FTX exchange focuses on cryptocurrency derivatives trading, creating a platform built by traders and for traders. FTX provides various trading instruments, including futures contract, leveraged token, volatility products such as MOVE contracts and options, spot and OTC market.
FTX was designed to prevent clawbacks (extra losses that due to the difference between actual liquidation loss and expected loss needs to be together covered by other users) using a three-tiered liquidation model that closes positions with rate-limited orders and leverages an insurance fund to prevent customer losses. Rather than fracturing liquidity across various tokens, collateral is shared in one universal stablecoin wallet to mimic the traditional futures market. FTX also allows traders to take leveraged or short positions without trading on margin or futures with their Leveraged Tokens that mimic the experience of trading on spot markets but allow 3x, -1x or -3x on various tokens. The FTX OTC desk is powered by Alameda.
The main founders are Sam Bankman-Fried, Nishad Singh, and Jen Chan, all of them have backgrounds in equity derivatives trading, understand both how derivatives are traditionally designed, and what derivatives there is market demand for. The founders of FTX come from leading Wall Street quant funds and tech companies: Jane Street, Optiver, Susquehanna, Facebook and Google. Before founding Alameda, Sam Bankman-Fried was a Jane Street Capital International ETF counter trader. He has traded many types of ETFs, futures, currencies and stocks, and designed an automatic OTC trading system for Jane Street.
Founded in 2017 by Sam Bankman Fried, Alameda Research is a quantitative cryptocurrency trading firm that provides liquidity in cryptocurrency and digital assets markets, which is the first venture of FTX founder and billionaire Sam Bankman-Fried and FTX was backed by Alameda Research.
According to a leaked balance sheet reviewed by CoinDesk on June 30, 2022, Alameda was revealed to have $14.6 billion in assets and $8 billion in liabilities, including $7.4 billion in unidentified loans, and the trading firm owned $5.8 billion of FTT tokens (including FTT tokens pledged as collateral). That balance sheet is full of FTX – specifically, the FTX token issued by the exchange that grants holders a discount on trading fees on its marketplace. It shows Alameda rests on a foundation largely made up of a coin that a sister company invented, not an independent asset like a fiat currency or another crypto. The situation adds to evidence that the ties between FTX and Alameda are unusually close.
After Sam Bankman-Fried founded FTX in May, in December of 2019, Binance announced its strategic funding for FTX equity and would hold $FTT, FTX's native token, for the long term. According to Crunchbase, the round was raised by one and only one participant, Binance, but the amount was not disclosed. In July 2021, Binance's CEO, Changpeng Zhao (commonly known as CZ), told Forbes the company has recently given up its equity stake in FTX. He explained the withdrawal as part of "a normal investment cycle" and says it was completed on good terms "We're still friends but we no longer have any equity relationship."
On November 2, 2022, Coindesk reported that Sam Bankman-Fried's Crypto trading firm Alameda Research's Q2 balance sheet showing that it had $14.6 billion in assets, most of which was $FTT. Since this balance sheet is private, we cannot verify the veracity of the claim. Later on November 6, Alameda's current CEO Caroline Ellison clarified on Twitter that the recently circulated balance sheet information was only part of Alameda's total balance sheet, and that Alameda had more than $10 billion in assets that were not reflected on it. An hour after the tweet, CZ tweeted that Binance decided to liquidate the ramaining $FTT on its book due to recent revelations that have came to light. And Binance will try to minimize market impact by spreading out the liquidation process over several months. Caroline then replied: Alameda is willing to buy the $FTT held by Binance for $22 OTC. While CZ wants to minimize the impact on the market, the total market cap of the Crypto market has fallen by about 3.5% in response.
On November 9, 2022, according to CZ, Binance intended to fully acquire FTX and had signed non-binding LOI. But one day later, November 10, Binance announced decision to abandon acquisition of FTX as result of due diligence.
You can buy FTX Token ($FTT) on many crypto exchanges, some of the main markets is listed below:
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In 2018 FTX launched an automated OTC RFQ system. In spite of the bear market and competitive OTC landscape, the team was able to quickly scale the volume to $30million per day without much marketing. Because FTX was able to offer some of the tightest spreads in the industry with fast settlement and no fees, it grew by word of mouth and became a source of liquidity for well-known OTC desks and exchanges. The team also built a world class portal, with an intuitive UI and API, and an easy to use settlement system. The OTC portal has been integrated into the FTX ecosystem, driving our OTC counterparties toward FTX.
Preventing Clawbacks
Current futures exchanges have frequent large clawbacks leading to losses in the millions of dollars due to poorly designed risk management systems. FTX significantly reduces the likelihood of clawbacks from ever occurring by using a three-tiered liquidation model.
- We first close positions down carefully with rate-limited liquidation orders in the market.
- We have a unique backstop liquidity provider program which jumps in to provide to accounts in danger of bankruptcy.
- We leverage the insurance fund to prevent customer losses.
Centralized Collateral Pool + Universal Stablecoin Settlement
With existing futures exchanges, collateral is required to be posted in separate margin accounts for different products (e.g., spot margin trading, futures and etc).
Additionally, the type of collateral required differs depending on what contract is being traded (e.g., Ripple perpetual swaps require XRP to be posted as collateral), resulting in capital being fractured across many different tokens. This makes it cumbersome to rebalance positions (e.g., having to liquidate another token to top up an XRP margin account). And in the case of short positions, this system is particularly counterintuitive since traders must purchase the very token they are intending to short.
Instead of posting collateral in multiple accounts and tokens, FTX uses a system similar to mature traditional futures markets today, whereby traders post collateral in a single currency.
FTX derivatives are stablecoin settled and share collateral in one universal margin wallet. This means that traders can deposit stablecoins as collateral for all derivative products, and their PNL is settled in stablecoins. Stablecoins allow traders to get legitimate USD-based price exposure and settlement, without needing a bank account. Using the same base currency as collateral for all of the contracts also makes it easier to shift positions around.
Side note:
However, not all stablecoins are eligible. In order for a stablecoin to be eligible for usage on the FTX platform, it must have proven itself to have a smooth redemption process and consistently trade close to par. Currently, USDC and TUSD are the stablecoins that best fit those requirements.
Non-inverted futures
FTX futures are standard, rather than inverted. This means that they are truley BTC/USD futures and not USD/BTC futures. Thus, a user’s USD PnL is simply (number of BTC contracts) * (change in price), the orderbook straightforwardly displays a number of BTC futures, and that closing a position just means selling off the number of BTC contracts you own.
Leveraged Tokens
Currently, there doesn’t exist a way to short or put on leveraged positions on many spot exchanges. Traders have to trade on margin or futures exchanges like Bitfinex, Okex and Bitmex. This can be more complicated for retail traders because they need to deal with funding rates, borrowing costs, and constantly have to monitor their positions to avoid being margin called. Not only that, traders are also exposed to the risk of losing significant funds, especially given high-profile failures of liquidity we’ve seen on futures exchanges recently.
Leveraged Tokens allow traders to take short or leveraged positions without having to trade on margin or futures exchanges. Say a trader wants to 3x short bitcoin. They can simply buy a 3x short bitcoin leveraged token on FTX. This process is as easy as buying BTC or ETH on a spot exchange. We offer 3x, -1x and -3x leveraged tokens for BTC, ETH, XRP, EOS, USDT, BNB, TRX, LEO, and BCH, and looking to add more in the future. With these tokens, traders can put on leveraged tokens in a more capital efficient way, requiring none of their assets to be stored in a margin wallet.
Leveraged Tokens are ERC20, which means they can also be listed on other spot exchanges. This enables spot exchanges to offer inverse price action and leverage positions to their customers without needing to implement their own margin trading and liquidation engine.
OTC portal
FTX has an embedded OTC portal, powered by Alameda Research. Users can buy and sell coins with the click of a button, accessing Alameda’s deep liquidity pool with no fees. Users are already trading $30m+ per day on the OTC portal.
