FTX Token (FTT) 2023 Guide

What Is FTX

FTX was one of the largest centralised cryptocurrency exchanges before its downfall. At its peak in 2021, FTX handled around 10% of the then $3.4 trillion face value of derivatives traded in crypto and the company managed to achieve a valuation of $32 billion, making it worth more than Nippon Steel. FTT is the native currency of the FTX exchange and serves as the backbone of the platform.

 

FTX skyrocketed to prominence, challenged the status quo and redefined the boundaries of possibility in the crypto space by introducing innovative derivatives, options, and tokenised assets that mirrored the traditional financial markets. The company was brought back down to earth in November 2022 when FTX was hit by a liquidity crisis and was forced to file for bankruptcy on November 11, 2022.

 

In April 2023, the FTX token doubled in price after news of the potential reopening and rebranding of the exchange sometime in the future was announced by its attorney in court. In September 2023, FTT’s price increased by 8% after Binance announced support for FTT/USDT trading pair. The future of FTX 2.0 remains to be seen.

 

FTX Key Features

These were some of FTX’s key features:

 

Clawback Prevention

FTX’s clawback prevention feature helps enhance the overall risk management of the exchange and minimises the negative impact of liquidations on traders. 

 

FTX has an insurance fund funded by a portion of trading fees. This fund is used to cover losses in cases where traders’ positions get liquidated and there is a deficit between the liquidation price and the actual market price. FTX will implement its clawback prevention mechanism in the event that a trader’s position is liquidated and there are still not enough funds in the insurance fund to cover the losses.

 

In the event of a clawback, FTX may distribute a portion of the losses among profitable traders on the platform who were not involved in the liquidated position. This allows the financial burden of the deficit to be borne by a broader group of traders, also known as a socialised loss mechanism.

 

But FTX sets limits on the maximum amount that can be socialised in the event of a clawback. These limits help protect traders from excessively large clawback losses.

 

Stablecoin-Settled and Centralised Collateral Pool

Unlike traditional futures contracts that settle in the underlying cryptocurrency (eg. Bitcoin or Ethereum), FTX’s Stablecoin-Settled contracts settle in stablecoins like USDT (Tether) or USDC (USD Coin). Using stablecoins for settlement can help traders reduce exposure to the price volatility of the underlying asset and hedge their positions without needing to hold the actual cryptocurrency. This makes trading crypto derivatives more accessible and risk 

 

In a typical derivatives exchange, collateral is spread over several distinct tokens and margin wallets which makes it hard for traders to rebalance and avoid liquidation. FTX uses a centralised collateral pool where traders deposit collateral into a shared pool maintained by the exchange. The centralised collateral pool enables cross-margin which means that traders can use their collateral to back multiple positions across different contracts simultaneously.

 

In addition to enhancing the overall liquidity on the platform, this also allows FTX to manage the risk associated with traders’ positions more effectively. The centralised collateral pool helps prevent situations where a trader’s liquidation leads to potential cascading liquidations and market instability.

 

Leverage Tokens

To take a leverage position, a trader typically has to trade on margin. With FTX’s leverage tokens, traders can take long or short leveraged positions without having to trade on margin. A trader who is looking to buy 5x long Ethereum can simply purchase a 5x long Ethereum leveraged token on FTX.

 

These ERC-20-based leverage tokens were listed on spot exchanges and can be acquired by FTX platform users.

 

FTT Tokenomics

FTT reached an all-time price high of $85.02 on September 9, 2021. The price increase of FTX’s token came on the back of major announcements and partnerships by the platform which led to increased public exposure. This includes FTX US acquiring Ledger X and FTX as the official crypto exchange sponsor of Major League Baseball in the US.

 

Since its all-time high, the price of FTT has fallen by more than 90% as of September 2023 due to the company’s accounting fraud scandal.

 

FTT has a maximum supply of 328,895,104 tokens of which 328,895,104 tokens have been created and are in circulation as of September 2023.  

 

FTT uses a deflationary token model whereby a portion of trading fees collected in FTT is burned, reducing the total token supply over time. With its “buy and burn” mechanism, FTX has permanently removed over 20 million FTT tokens from circulation. This scarcity factor can potentially create a positive feedback loop for FTT’s price.

 

FTT Use Cases

FTT is an ERC-20 standard token that was initially established as a reward for exchange transactions but its use cases evolved over time to include various utilities and incentives including but not limited to:

 

Trading fee discounts: FTT token holders can receive tiered discounts on their trading fees. The larger the amount of FTT tokens held, the greater the discount.  

 

Collateral for futures positions: FTT can be used as collateral for futures positions on FTX. Traders can open larger positions than they would be able to with fiat currency alone.

 

Staking rewards: Traders can stake their FTT tokens to earn rewards. The rewards are paid out in FTT and are based on the amount and duration of the FTT staked.

 

Access to exclusive features: FTT holders get access to exclusive features on the FTX platform, such as early access to Initial Exchange Offerings (IEOs) for various NFTs and token projects.

 

Who Created FTX

FTX was founded in 2017 by Sam Bankman-Fried and Gary Wang. Bankman-Fried graduated from the Massachusetts Institute of Technology (MIT) with a degree in physics and worked at renowned trading firm, Jane Street Capital, before founding Alameda Research and FTX. Before their fall from grace, Alameda Research and FTX were some of the most influential players in the crypto trading space having managed over $1 billion in digital assets and achieving an average daily derivatives-trading volume of $11.5 billion respectively.

 

Unlike Bankman-Fried, Wang prefers to remain outside of the limelight and there is little public information about him. Wang met Bankman-Fried at a math camp in high school and also went to MIT, graduating with a degree in mathematics and computer science. He later worked at Google before co-founding FTX. 

 

At the age of 28, Wang had a net worth of $5.9 billion and topped Forbes’ 2022 list of the world’s billionaires under 30. Most of Wang’s fortune was tied up in his stake in FTX and a share of its FTT tokens.

 

FTX managed to raise a total funding of $1.8 billion and counts Sequoia Capital, Softbank Capital, Paul Tudor Jones, and Temasek among some of its investors.

 

How To Trade FTT On The Flipster App

To trade FTT on Flipster:

 

  1. Download the Flipster app and set-up your account
  2. Go to [Trade]
  3. Click on [Search] at the top of the page and type in FTT
  4. Click on SEI
  5. In the [Amount] field, type in the amount of FTT you wish to buy or sell. Alternatively, you can select the percentages below to choose how much to use from your available funds.
  6. Click [Preview order] to check your order
  7. Once you have confirmed the details, click on [Buy FTT – Long] button or [Sell FTT – Short] respectively.

 

Disclaimer: This material is for information purposes only and does not constitute financial advice. Flipster makes no recommendations or guarantees in respect of any digital asset, product, or service. 

 

Trading digital assets and digital asset derivatives comes with significant risk of loss due to its high price volatility, and is not suitable for all investors.


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