Table of Contents

🤔 What is FTX ?

FTX is a cryptocurrency exchange launched in April 2019.

💡 What role does FTT token play ?

FTT is the incentive token for FTX exchange platform. FTT holders receive following benefits while using FTX exchange:

  • Increased referral rates: Referrers that stake FTT are paid a higher fraction of their referees’ fees.
  • Maker fee rebates: Stakers get maker fee rebates (in addition to the standard FTT fee discounts).
  • Free swag NFTs: Stakers can spin the non-fungible swag wheel for a chance to win a free NFT, redeemable for FTX-themed swag, or resellable at the NFT marketplace.
  • Increased airdrop rewards: Stakers get increased SRM airdrops (and potentially later other airdrops and yields).
  • Waived blockchain fees: Stakers get a number of free ERC20 and ETH withdrawals per day.
  • IEO tickets: Stakers get tickets for IEOs hosted in FTX.
  • Collateral: FTT can be used as collateral for a futures position.

📝 Origin of FTX

  • MIT graduates Sam Bankman-Fried and Gary Wang founded FTX in May 2019.
  • In August 2020, FTX acquired Blockfolio, a cryptocurrency portfolio tracking app, for $150 million.
  • In July 2021, FTX raised $900 million at $18 billion valuation from over 60 investors, including Softbank, Sequoia Capital, Third Point Management, Paul Tudor Jones, and Alan Howard.
  • In September 2021, FTX moved its headquarters from Hong Kong to The Bahamas.
  • On January 14, 2022, FTX announced a $2 billion venture fund named FTX Ventures.
  • In January 2022, FTX raised $400 million in Series C funding at a $32 billion valuation.

👴🏻 Sam Bankman Fried: Founder

  • Bankman-Fried was born in 1992 is son of Barbara Fried and Joseph Bankman, both law professors from Stanford Law School.
  • He studied Physics at MIT from 2010 to 2014.
  • In the summer of 2013, Bankman-Fried began working at Jane Street Capital, a proprietary trading firm, trading international ETFs. Initially an intern, he returned there full-time after graduating.
  • In September 2017, Bankman-Fried quit Jane Street and moved to Berkeley, where he worked briefly at the Centre for Effective Altruism as director of development from October to November 2017.
  • In November 2017, he founded Alameda Research, a quantitative trading firm.
  • In January 2018, Bankman-Fried organized an arbitrage trade, moving up to $25M per day, to take advantage of the higher price of bitcoin in Japan compared to in America.
  • He founded FTX, a cryptocurrency derivatives exchange, in April 2019.

😌 What problems does it solve ?

  • Built by traders for traders: Most developers at FTX exchange worked at Alameda Research along with Sam Bankman Fried. They developed FTX exchange because they were not satisfied with the existing options.
  • New products and fast development cycle:
    • FTX company is located in Bahamas, which is one of the most friendly and lenient places to crypto company. This allows FTX to offer leveraged and unique products that regulated exchanges cannot offer.
    • FTX can leverage Alameda’s tech team — an experienced, battle-tested group used to building complex crypto trading systems under time pressure.
    • These advantages allow FTX to launch new features and unique trading assets in a much shorter timeframe.

🤖 FTX platform

Some unique features of FTX exchange as compared to other exchanges are as follow:

  • Clawback Prevention: A significant amount of customer funds on other derivatives exchanges have 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:
    • Futures: Traders can take both long and short bets on leading cryptocurrencies using over 100 quarterly and perpetual futures pairs with margins of up to 101x. Stablecoins, such as USD and tether (USDT), are used as collateral to open and maintain positions.
    • Leveraged Tokens: FTX offers ERC20-based tokens that provide traders up to 3X leveraged exposure against the underlying trading pair. For instance, if a trader opens a BULL/USD – 3x long Bitcoin token and Bitcoin rallies 10% from the time of purchase, the leveraged token would gain 30%. FTX’s leveraged tokens have no margin requirement.
    • Options: Traders can speculate on future price direction and hedge against their open positions with a range of call and put options that give the holder the right but not the obligation to buy or sell at a future strike price.
    • MOVE: These contracts allow traders to bet how far the price of a cryptocurrency will move over a time period, irrespective of the direction, essentially making them a play on volatility. As long as the price of the underlying cryptocurrency moves over a specific dollar amount—either up or down—the contract generates a profit.
    • Spot Markets: FTX offers over 100 different spot trading pairs, providing exposure to leading cryptocurrencies, such as Bitcoin, Ethereum, Binance Coin, Chainlink, and Ripple’s XRP.
    • Prediction market: Traders can bet on real-world events like outcome of elections etc.
    • NFTs: Users can buy/sell/ launch their NFT collection of FTX.
    • Spot Markets: FTX offers over 100 different spot trading pairs, providing exposure to leading cryptocurrencies, such as Bitcoin, Ethereum, Binance Coin, Chainlink, and Ripple’s XRP.
  • Stake: Users can stake cryptocurrencies in their account to earn intrest.
  • FTX Pay: Allow users to receive/ send crypto or fiat payments.
  • Quant trading: Allows traders to code and automate their trading strategies.

🤑 How much money does the project have for future development ?

  • Funding:
    • In July 2021, FTX raised $900 million at $18 billion valuation from over 60 investors, including Softbank, Sequoia Capital, Third Point Management, Paul Tudor Jones, and Alan Howard.
    • In January 2022, FTX raised $400 million in Series C funding at a $32 billion valuation.
  • FTT token reserves: The team holds 31% FTT supply.
  • Revenue: Fees generated on FTX platform.

👍 Tailwinds

  • Growing ecosystem: More people want to buy crypto as they become more popular.
  • Marketing: FTX is spending a lot on marketing efforts:
    • On April 2021, FTX acquired the naming rights to the Miami Heat’s basketball stadium in a 19-year, $135 million deal, fully renaming it FTX Arena in June 2021.
    • On June 4, 2021, FTX announced a 10-year, $210 million naming rights deal with TSM, an esports organization to officially change their name to Team SoloMid FTX.
    • On June 23, 2021, FTX announced a partnership with Major League Baseball. As part of the deal, the FTX logo is featured on the uniforms of the umpires.
    • On June 29, 2021, Tom Brady, an American football player in the NFL, became an ambassador for FTX. As part of the partnership, Tom Brady and his wife Gisele Bündchen both took equity stakes in FTX.
    • In August 2021, Kevin O’Leary signed on as official spokesperson for FTX, to be paid for in cryptocurrency which will be managed on FTX’s platform.
    • FTX also paid $17.5 million for the naming rights to California Memorial Stadium for ten years.
    • In September 2021, FTX announced a long-term partnership with the Mercedes-AMG Petronas F1 Team that adds the FTX logo to the cars and uniforms of both Lewis Hamilton and Valtteri Bottas.
    • In October 2021, FTX ventured into Cricket by signing a global deal with International Cricket Council starting with the T20 World Cup held in UAE.
  • Sustainable model: FTX exchange generates insane amount of profits and has a large war chest that will help them to hire the best talent and add new features.

Risks

  • Centralization: FTX is a private for-profit company, where decisions are made by a handful of founders. They are not bound by law to keep their promises:
    • Offer fee discounts to traders holding FTT tokens.
    • Allowing traders to use FTT as collateral, etc.

FTT is an ERC-20 token that exists on Etherium blockchain. But it does not have any value outside FTX exchange ecosystem.

  • Competition: FTX will face stiff competition not only from centralized exchanges like Binance but also from decentralized exchanges like Uniswap, DyDx, 1Inch, etc.

💰 Tokenomics

FTT tokens had fix max supply of 350 million tokens. They were distributed as follows:

These tokens will be released as follows:

FTX team buys and burns FTT tokens every week equal to the value of:

  • 33% of the market fee.
  • 10% of net addition to insurance fund.
  • 5% of other fees.

They will keep buying and burning FTT tokens till the time half of FTT token supply has been burned.

Demand pressure

Token’s price increases due to demand pressure.

Demand pressure on FTT will come from:

  • Token burn: FTX buys and burns FTT token.
  • Traders: They will acquire FTT tokens to take advantage of benefits offered by FTX exchange to FTT holders.
  • Speculators: They will acquire FTT tokens for future price appreciation.

Supply pressure

Supply pressure on a token decreases its price.

Supply pressure on FTT token will come from:

  • Early investors: They have made large profits on their initial investments. Some investors will sell their holdings to realize their gains.
  • Team: They have access to 31% of FTT tokens.

🧐 Indicators to watch out for

  • Trading volume on FTX exchange is growing (Data provided by FTX-not confirmed from any third party):
  • FTX exchange users are growing (Data provided by FTX-not confirmed from any third party):
  • YouTube channel is growing:
  • Twitter account is growing:

👋Final remarks

FTX is an amazing platform, built by traders for traders. CEO Sam Bankman-Fried is one of the most hardworking and philanthropic persons.

I expect the FTT price to keep rising till the time:

  • New users keep joining.
  • FTX keeps burning FTT token.
  • FTT token has utility on FTX exchange.

😊 Do further research

You can continue your research by using following resources: