FTX Exchange Review: A World-Leading Cryptocurrency & Derivatives Exchange

In its simplest form, FTX is a cryptocurrency exchange that gives you access to the derivatives trading markets. However, this is just a small segment of what the platform offers.

FTX is original, inventive, and has several unique features that can take the cryptocurrency trading scene to the next level.

In the short time since its launch, FTX has established itself as one of the top five derivatives exchanges in terms of daily trading volume.

This detailed FTX review will walk you through the different products on offer, supported marketplaces, functionalities, and the fees involved to start trading on the exchange.

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What is FTX Exchange?

FTX was launched in May 2019, endorsed by Alameda Research – a renowned quantitative cryptocurrency trading firm.

It has made its mark in the trading arena by offering industry-first derivatives and a lengthy assortment of volatility products.

In December 2019, FTX also managed to secure funding from Binance, concreting its influence in the cryptocurrency trading scene.

Designed by traders themselves, FTX strives to become a platform that is intuitive enough for first-time users and powerful enough for seasoned traders.

FTX Tradable Products

FTX is primarily a cryptocurrency derivatives exchange – meaning, you cannot trade any real assets.

Instead, you will be trading a derivative product that reflects the value of the underlying asset. This could be in terms of contracts or tokens that represent the price of the asset.

FTX features an extensive array of tradable instruments, some of which are entirely unique to the exchange.

Let us explore these markets in more detail.

Futures

Futures are derivative instruments that obligate the associated parties to trade an asset at a prearranged date and price.

Trading in cryptocurrency futures also invites the benefits of leverage. On FTX, you can apply leverage of up to 101x on most of the platform’s derivatives contracts.

The notable aspect here is that FTX has included futures for lesser-known cryptocurrencies with low market caps.

Crucially, the majority of these digital assets cannot be traded via futures contracts on any other exchanges. This has attracted a unique set of traders and speculators to the FTX platform.

At present, FTX supports future contracts for over 80 cryptocurrencies. In stark comparison, BitMEX, one of the leading cryptocurrency exchanges for derivatives trading, has futures contracts available for only 13 different digital coins.

Note: FTX also allows you to trade Perpetual Futures. These are futures contracts that do not expire. Instead, the price of perpetual futures is updated every hour to keep pace with the value of the underlying asset.

Options

For those new to trading, options are derivatives that are similar to futures. The main difference is that it is not mandatory for the contract holder to purchase the underlying asset on expiry.

Instead, options give you the right but not the obligation to proceed with the asset purchase.

Currently, only Bitcoin options are supported on FTX. You can design your own options contract and request a quote on the exchange. FTX will give you the first offer within 10 seconds.

It is then up to you to decide whether you want to accept this offer or choose not to trade. You can also wait longer to see which offers show up later, if any. If you do not accept any offer, the Request for Quote will disappear after 5 minutes.

Leveraged Tokens

Leveraged tokens are financial instruments unique to FTX. They are ERC20 assets that reflect the real-world price of the underlying digital coin.

For instance, BULLUSD is a 3x long BTC token – meaning, for every 1% BTC goes up in a day, the instrument increases in value by 3%.

If BTC goes down 1%, the value of BULLUSD will also go down by 3%, and so on.

FTX currently has four types of leveraged tokens available:

• BULL is +3x
• BEAR is -3x
• HEGDE is -1x, and
• HALF is +0.50x.

To take the example of EOS – If EOS goes up 1% in a day, then:

• EOSBULL goes up 3%
• EOSBEAR goes down 3%
• EOSHEDGE goes down 1%, and
• EOSHALF goes up 0.50%.

The BULL, BEAR, and HEDGE tokens automatically rebalance themselves throughout the day to maintain the target leverage. In other words, if you made a profit, the tokens will reinvest the money.

If you lose money, the tokens will sell some of the position to reduce its leverage.

This ensures that you avoid liquidation risk while trading with leveraged coins. Moreover, as the rebalancing is automated, it saves time and effort from the trader’s side to manually manage their exposure.

MOVE Contracts

MOVE contracts are yet another unique volatility product available on FTX. These represent the amount that an asset moves in a set period of time.

For instance, if ETH moves $100 over a 1-day period, the MOVE contract will be valued at $100.

Traders can open a long position on a MOVE contract if they think the asset will move significantly in either direction.

On the other hand, you can open a short position if you think the asset will remain relatively stable.

MOVE contracts are offered for three different trading periods.

• Daily: They expire after a single moving day.
• Weekly: These MOVE contracts expire within a seven-day period.
• Quarterly: These contracts run on a three-month duration.

Similar to other tradable assets we have discussed thus far in this FTX review, MOVE contracts can also be traded with leverage.

Spot Markets

Though FTX focuses on derivatives, the platform is also home to a large selection of cryptocurrency spot markets. Here, you will be trading the real asset and not a financial instrument that holds the underlying value of the asset.

At the moment, FTX features spot markets for nearly 70 cryptocurrencies.

Prediction Markets

Prediction markets work more or less like a traditional ‘betting’ set up. Instead of a financial asset, you will be speculating on the possible outcome of a real-world event.

If your prediction comes to fruition, you stand to make a profit. If your prediction is wrong, you will lose your stake.

One recent prediction market launched by FTX was for the 2020 US Presidential election. The exchange allowed users to place trades on contracts named after the different election candidates – such as TRUMP for Donald trump, BERNIE for Bernie Sanders, and BIDEN for Joe Biden, among others.

Such prediction markets are an interesting way of trading outside the traditional norms of cryptocurrency exchanges.

BVOL Tokens

BVOL is a digital token backed by the FTX platform. They are Ethereum based tokens that attempt to follow the volatility of cryptocurrencies – in this case, Bitcoin.

Currently, BVOL gets its price action using the FTX MOVE contracts and BTC perpetual contracts.

• For instance, say you want to buy $1,000 worth of BVOL.
• The exchange purchases $1,000 worth of FTX MOVE contracts and shorts another $1,000 of BTC perpetual contracts.
• Hence, 1 BVOL now equals 1x long FTX MOVE and 1x short BTC-PREP.

You can use BVOL tokens to go long or short, depending on which way you think the respective market will go. BVOL tokens reflect the daily returns of 1x long volatility of BTC. Whereas iBVOL reflects the daily returns of 1x short the volatility of BTC.

FTX New Volatility Products

FTX is constantly innovating both its platform and supported tradable assets. Although it is mainly a cryptocurrency derivative platform, recently, it has expanded its boundaries to accommodate spot markets, oil futures, and more.

It has also been working on ‘ABNB’ derivatives that represent the market capitalization of Airbnb. Inc. If FTX continues with this innovative momentum, we are likely to see many new volatility products available for trading on the exchange.

FTT: FTX Native Token

Keeping up with other cryptocurrency exchanges, the exchange also has released its native token that serves as the backbone of the FTX ecosystem.

In a short duration, FTX has also emerged as one of the top 50 cryptocurrencies in terms of market cap. FTX also plans to burn approximately half the supply of FTT tokens in order to create a scarcity in its supply and thus – drive up market demand.

FTT is listed on many popular cryptocurrency exchanges, including Binance. BitMEX, CoinEx, and others. You can also trade FTT in spot markets such as FTT/USD, FTT/USDT, and FTT/BTC.

Apart from being a tradable asset, FTT also brings a number of benefits to token holders. For example, the token provides lower trading fees as well as socialized gains via the FTT insurance fund. Moreover, you can also use FTT as collateral for futures trading.

FTT Staking

FTX also actively encourages traders to stake FTT on the exchange. There are a few exclusive benefits that come with this, such as :

• New maker fee schedule: Stakers have a separate maker fee schedule that overrules the normal fee schedule. This is in addition to the standard FTT discounts.
• Bonus votes: FTX often takes polls from traders before launching a new financial instrument on the site. For instance, until January 11, 2021, traders could vote on which tokenized stock groups FTX should list next. FTT holders get additional votes on such polls.
• Increased SRM airdrop rewards: SRM is the native token of the Serum ecosystem. FTX is committed to dispersing 5% of the total supply of SRM to FTT holders over time.
• Increased referral rebate rates: In FTX’s affiliate program, traders who stake FTT receive a higher percentage of their referee fees.

Note: FTT token is not accessible in the United States, or any other restricted jurisdictions. If you reside in one of these locations, you are not permitted to transact in FTX tokens.

FTX OTC Desk

For institutional traders who want to invest in large amounts of digital assets, FTX has set up an OTC or ‘Over The Counter’ cryptocurrency exchange. Though this feature is common to other exchanges, FTX has made the process much easier and more cost-effective.

The OTC portal is accessible at otc.ftx.com around the clock. Traders can use the same FTX account when using the OTC service and get instant OTC quotes on almost all major digital coins.

You can deposit and withdraw your assets from the OTC platform using your FTX wallet. The most impressive aspect of the FTX OTC market is that there is no additional fees – except for the spread.

FTX Quaint Zone

The Quaint Zone is where FTX users can build and share their trading strategies. The platform allows you to create a predefined set of conditions called ‘Quaint Zone Rules’ to instruct orders on your FTX account.

In other words, this is where you can set up orders for your cryptocurrency trading positions. However, FTX adds several layers of customizable options and flexibility to these rules.

For example, you can design your rules by indicating the trigger, the action, and other monitoring rules. It is also possible to string together multiple actions for each rule.

FTX allows you to create several rules, which you can enable and disable as needed.

Every 15 seconds, these rules will check whether the trigger is true. If it is, the respective action will be executed. The process will continue unless you use a Pause rule – which will sleep the specific rule for a given duration.

Most importantly, unless you disable specific strategies, all rules will run simultaneously.

Supported Jurisdictions

FTX is available globally, except for residents of the following countries and jurisdictions:

• Cuba
• Crimea and Sevastopol
• Syria
• Iran
• North Korea
• Antigua, or Barbuda

Residents of the United States can access FTX through the provider’s dedicated platform – FTX.US. However, the platform has limited digital assets and volatility products when compared to FTX.com.

Similarly, depending on your location, you might also see a few changes in the availability of some trading instruments. For instance, US residents cannot legally access FTT tokens.

FTX Trading Fees

There are several trading fees and commissions that you need to be aware of when using FTX, which we elaborate on in more detail below.

Taker and Maker Fees

FTX has a tier-based fee structure for its futures and spots markets. It is common for trading platforms to charge lower maker fees in order to encourage a larger order book on the exchange.

There are six tiers categorized based on your 30-day trading volume.

Tier 1 traders have to pay a taker fee of 0.07% and a maker fee of 0.020%.

On the other hand, the highest tier – tier 6, comes with a 0.04% taker fee and a 0% in maker fee.

FTX VIP Accounts

FTX has an exclusive VIP program for professional traders. This includes several perks, such as:

• Lower trading fees
• Dedicated account managers
• Flexible API limits
• Direct access to senior developers
• An option to provide inputs on new FTX products

Deposit and Withdrawal fees

FTX does not charge any deposit or withdrawal fees for cryptocurrency transactions to and from your digital wallet.

However, if your deposit or withdrawal exceeds your trading volume, the exchange can charge you a fee of up to 0.10%. FTX will reach out to you in case you are liable to pay this fee.

In case of fiat withdrawals, any amount below $10,000 will come with a $75 fee.

Other Trading Fees

• Futures Settlement: FTX charges no additional fees for futures settlement.
• Spot Trades: Fees on spot trades are deducted from the asset you receive. For instance, if you place a buy order on BTC/USD, your spot trading fees will be charged in BTC. If you place a sell order, the fee will be charged in USD.
• Leveraged tokens: It costs 0.10% to create as well as redeem a token. In addition, you are also liable to pay a daily management fee of 0.03%.
• Perpetual Contracts: The platform charges a funding fee on perpetual contracts. However, this is not kept by the exchange. Instead, the funding fee will be paid to holders at the other end of the contract.
• Fees on Leveraging: Leverage fees will also apply. For example, leverage of 50x increases your trading fee by 0.02%. With leverage of 100x, the trading fee will rise by 0.03%. These additional fees are paid to the insurance trading fund. However, this fee is not applicable if you are leveraging BTC and ETH perpetual contracts.
• MOVE Contracts: Fees related to MOVE contracts depend on the price of the underlying asset.
• HTT Holders Discount: As we covered earlier, FTT token holders will also receive additional discounts on trading fees. The extent of this reduction will depend on the amount of FTT you hold.

FTX Security

Like any other cryptocurrency exchange in the space, FTX emphasizes that security is at the top of its priorities. For this, FTX has a digital wallet where you can store your digital assets.

The platform also encourages users to activate two-factor authentication – which will require a code to access your trading funds as well as when making a withdrawal.

According to the website, FTX regularly works with researchers to ensure the security of its products and services.

That said, currently, the FTX website does not feature a dedicated section on the security aspects of the exchange. On the other hand, you can find detailed accounts of their liquidation engine as well as the insurance fund.

This gives us the impression that FTX has put in serious consideration on the safety aspects of the platform. Furthermore, since its release, FTX has been clean from any security breaches, nor has it faced any malware threats.

As of now, it seems that FTX has enough protocols and systems in place for the security of traders.

FTX Insurance Fund

Considering that FTX allows leverage of up to 101x, it is only reasonable that the platform has sufficient insurance funds to prevent customer losses.

Traders who take advantage of leverage of between 50x and 100x are required to pay slighter higher trading fees – which will be directly contributed to the insurance fund.

In the event that the FTX liquidation engine fails, this insurance fund will be used to pay out traders who were forced to close their positions at a loss. For instance, an unforeseen and a sudden fall in the price of Bitcoin could trigger the activation of this insurance fund.

In the event that this insurance fund proves to be insufficient to pay clients, FTX has set aside around 5% of non-FTX owned FTT tokens as a contingency.

The FTX insurance fund has historically increased in size during periods of high volatility. These additional returns are divided among FTT token holders as ‘socialized gains.’

KYC Requirements

There is no requirement to go through a KYC process when using FTX. Instead, the exchange has set up three tiers of account verifications.

For Tier 0 – you only need to provide an email address to start trading. But, your limits will be capped to $1,000 per day.

For Tier 2 – you have to provide your country of residence, which gives you a trading limit of $2,000 per day.

For Tier 3 – you have to provide a photo ID, proof of address, and source of income. This will result in unlimited trading volumes and withdrawal requests.

FTX User Experience

The team behind FTX has been committed to developing an exchange that is easily accessible for all levels of traders. That is evident the very moment you access the FTX homepage.

The platform has a sleep interface that can be switched between light, dark or black modes. You can get most information about what FTX offers right on the homepage without having to sign up.

Best of all, you can drag around features, rearranging them to create a layout for the platform that is more suited to your liking.

In addition, you can also benefit from an extensive set of articles, user manuals, and tutorials on how to use the FTX exchange. For those who need to trade on the go, FTX also has a mobile app loaded with trading tools and features.

Traders can also use API keys to automate their crypto trading on the FTX exchange.

FTX Customer Service

In terms of customer service, FTX has ensured that users can reach them through multiple modes of communication.

To start, FTX has curated a comprehensive set of guides and articles on the different features of the exchange. If you are not able to get answers to your question through these manuals, the live chat box is always available.

You can also send direct emails to the customer support team.

Notably, the FTX team has taken steps to cater to its comprehensive user range through social media channels – which include Facebook and Youtube.

In addition, there are also dedicated Telegram and WeChat groups for different languages, where users can communicate with other traders in the FTX community.

Is the Exchange Suitable for Beginners?

Make no mistake about it – tradable derivatives are complex financial instruments. With leverage and automation, trading cryptocurrency derivatives can be a complicated process for novice traders.

Moreover, trading with leverage comes with high risk and is better suited for experienced traders.

Looking at the wide range of features offered, it is evident that FTX was not targeted specifically at beginners. After all, trading volatility products, including options, futures, and leveraged tokens, requires a deep understanding of the underlying asset and the market itself.

As such, we do not recommend derivatives trading on FTX if you are only at the beginning of your cryptocurrency trading journey.

That said, FTX still features plenty of spot markets that are not commonly available in other cryptocurrency exchanges. If you are a novice trader interested in low-cap digital assets, it might be worth checking out FTX.

However, before you dive in, make sure you do your research of the respective cryptocurrency market.

FTX Exchange: The Verdict?

We rate FTX as a leader in the Crypto trading arena, They are continuously improving and growing at a rapid rate. The platform never fails to impress traders with new innovative financial products and services.

Since launch their reputation has only grown, in times of volatility in the crypto markets, FTX has proven itself as one of the only centralized exchanges to hold up – When Binance, Coinbase and others have suffered from down-time, FTX has shined.

Their CEO Sam Bankman-Fried is a prominent member of the crypto community, his twitter account is well worth a follow. He comes across has an open and trustworthy person which can be a rare trait in the competitive world of cryptocurrency trading.

For investors in search of liquidity, FTX is well worth a look. The platform has several features that are entirely unique to the exchange – such as leveraged tokens and prediction markets.

Moreover, it is continuously evolving to come up with new products and solutions for the trading arena. As a result, the exchange is establishing itself as a go-to destination for cryptocurrency traders in search of new possibilities.

Overall, FTX is an advanced and professional crypto trading and derivatives exchange in the current cryptocurrency landscape. If you are on the lookout for guaranteed liquidity & honesty backed by robust infrastructure, then FTX could be the right exchange for your trading goals.

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FTX Exchange

9.2

Ease of Use

9.0/10

Fees

9.0/10

Reputation

10.0/10

Customer Support

9.0/10

Design

9.0/10

Pros

• Purchase cryptocurrency using credit/debit cards
• Competitive Trading fees
• An unparalleled selection of derivatives products
• Reduced trading fees with FTT Token
• Excellent liquidity

Cons

• Limited access for US residents
• More Suited for experienced traders
• Leveraged tokens are risky

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