FTX describes itself as an exchange made by traders and for traders. It is one of the top futures and derivatives exchanges in the Crypto space which has become a top choice for institutions.
Just like other top exchanges, FTX has a utility token called FTT token. The FTT token offers discounts to its holders on FTX exchange and many more benefits.
FTX is a top derivatives trading exchange that was established by Sam Bankman Fried, one of the popular experts in the Crypto space. The exchange provides unique options for traders to trade and invest with, which has more leverage than other exchanges. Traders on the platform can trade various trading products like leveraged tokens, derivatives, and options. It also provides spot markets in over 100 unique trading pairs.
Due to FTX’s variety of product offerings and its simple desktop and mobile trading apps, it’s convenient to use for traders of all skill levels. It also offers advanced trading features and tools that are suitable for experienced traders but easy to use for new traders who need a little help getting started with crypto trading.
FTX exchange was established to solve some of the challenges that exist in most cryptocurrency exchanges by providing a three-tier liquidation model that uses rate-limited orders to close trade positions.
It also offers an insurance fund that prevents loss of funds for its users. It does this by sharing collateral across all the tokens in one universal stable coin wallet.
FTX’s leveraged tokens are similar to other tokens on the spot market, but they allow for 3x, -1x, or -3x leverage on some popular cryptocurrencies. Its OTC order desk is powered by Alameda Research.
What Makes FTX Exchange Unique?
FTX exchange offers various unique trading features which set it apart from other Centralized cryptocurrency exchanges. They include the following;
FTX exchange allows users to buy leveraged tokens just like normal ERC20 tokens on a spot market. Users don’t have to manage their collateral, margin, or liquidation prices. Leveraged Tokens (LTs) are ERC20 tokens that indicate a leveraged crypto position. There are 4 leveraged tokens for every future position on FTX. They are; BULL (+3x); BEAR (-3x); HEDGE (-1x); and HALF (+0.5x).
For example, the ETHBULL token is a +3x leveraged ETH token on FTX. That means, if you bought $10 worth of ETHBULL it’ll represent a $30 position in ETH using 3x leverage.
FTX has a partnership with a German brokerage firm, CM-Equity, to enable users to trade and reclaim tokenized stocks. A tokenized stock is a derivative that tracks the performance of an associated stock like Apple (NYSE: AAPL) or Tesla (NASDAQ: TSLA).
Although the purchased tokenized stock is an asset that represents the underlying equity, FTX allows investors to receive dividend payouts if the underlying equity shares pay dividends.
Futures are derivative instruments that can be bought or sold at a predetermined price at a specified time in the future, between unknown parties.
Trading futures in cryptocurrency provides traders with some level of leverage. On FTX, a trader can use a leverage of up to 101X on most of its derivatives contracts. With this leverage, a 1% change in the price of Bitcoin could result in a 100% change in the funding amount.
FTX also has future contracts for less popular cryptocurrencies with low market caps. It has a futures contract for up to 80 cryptos. Many of these futures contracts can’t be traded on any other exchanges, which has attracted some unique traders and speculators to the FTX exchange.
What is FTT Token?
FTT is the native cryptocurrency of FTX exchange. It was initially offered as a reward for performing transactions on the FTX exchange. Its utility has expanded to include other functions within FTXs ecosystem, including VIP discounts and Liquidity provider rewards.
FTX Token (FTT) is an Ethereum-based token that is compatible with all wallets and exchanges that supports ERC-20 tokens.
Its circulating supply is over 127,000,000 FTT and the total supply of the token is around 340,000,000 FTT
Due to the limited number of FTT’s total supply, many crypto enthusiasts suggest that FTT is a good investment. This is because the token’s price could surge over time as the token supply continues to decrease.
Even if developing exchange tokens is a common trend among cryptocurrency exchanges, FTX Token is different from other tokens. This is because the FTX Exchange is not just a regular trading exchange but it’s focused on offering unique trading instruments to retail and institutional investors. Hence, FTT isn’t in direct competition with similar exchanges as it targets its own crypto niche.
FTT Token Use Cases
The value and growth of an exchange’s token often depends on the use case the token serves. Here are some of the use cases of FTX’s token:
FTT Use Case: Collateral
Some traders make use of FTT tokens as collateral for trading futures positions. For example, if a trader wants to purchase BTC-PERP, you will have to make use of FTT as collateral for the trade. This increases the demand for FTT in FTX’s ecosystem.
FTT Use Case: Leveraged Token Listing Fees
Project owners who want to list their new tokens on FTX’s exchange often make use of FTT to pay for listing fees when creating their leveraged tokens and listing them on the exchange. For instance, if Ann wants to list her new leveraged token, AVAXBULL, she’s required to pay some 0.10% listing few, which can be paid with FTT.
FTT Use Case: White Label Solutions
Crypto project owners who intend to white label some of FTX’s features on their platform can pay for the cost of this integration with FTT tokens. For instance, if Bob decides to white label some version of FTX’s OTC portal and futures exchange, he will have to pay costs in FTT.
FTT Use Case: Staking
FTT token is often staked by FTX’s users to partake in several benefits on the exchange like increased airdrop rewards, bonus votes in on-chain polls and avoiding blockchain fees. These discounts increase according to the amount of FTT held. It takes 14 days to unstake FTT and such users won’t get any staking rewards. For instance, if you stake 50 FTT tokens, you could avoid paying the high transaction charges of ETH on FTX exchange.
FTT Use Case: Discounted Trading Fees
FTT also offers discounted trading fees for traders trading FTT token. Through this discount fees, traders are rewarded to purchase FTT tokens so they can reduce the trading fees they pay. Trading fees discount ranges from 3% to 60%. This depends on the amount of FTT held.
FTT Use Case: Token Burns
FTX tries to control the supply of FTT tokens in order to increase FTT’s price by burning some of the tokens. FTX uses one-third of the fees generated on its exchange to purchase FTT tokens in order to burn, or destroy them. FTX will continue to burn FTT tokens until 50% of all the FTT tokens created have been burned.
FTT in the Token Economy
FTT is a digital asset that facilitates most operations on FTX exchange. The token has several valuable use cases, which has led to an increase in demand for the token. This can be seen in the large number of the tokens that are currently in circulation. FTX is also actively trying to control the supply of FTT tokens by buying back FTT tokens with a large percentage of its generated fees. Then they go ahead to burn the tokens.
Also, existing FTT token holders are rewarded with various incentives for holding the token. Several crypto enthusiasts believe that due to some of FTT’s use cases, it has a huge potential for growth and it will gradually become one of the strongest Centralized exchange tokens.
If the market share of FTX exchange keeps increasing its market share at the current rate, FTT could become one of the top 10 tokens by market value in the near future.