Creators of FTX are traders themselves, trading a variety of ETFs, currencies, futures and equities. The team came from leading Wall Street quant firms and tech companies such as Jane Street, Susquehanna, Optiver, Google, and Facebook. FTX is also in partnership and collaboration with a number of cryptocurrency firms such as Circle, True USD, Paxos, Fenwick and West, Proof of Capital, Galois Capital, Sequoia, and a lot more. One of the goal FTX also have is to donate to the world’s most effective charities such as Effective Altruism, Give Well, The Humane League, and OpenAI.
The cryptocurrency derivatives exchange offers innovative products including industry-first derivatives, options, volatility products and leveraged tokens. The team behind this project strives to develop a platform robust enough for professional trading firms and intuitive enough for first-time users.
FTX is a Bahamian cryptocurrency exchange. It was established in Antigua and Barbuda and has its headquarters there. As of July 2021, the exchange had over one million users and an average daily trading volume of $10 billion. FTX also runs FTX.US, a separate exchange for residents of the United States. It was established with the intention of making as much money as possible to donate to charitable causes, in accordance with the earning to give principle of effective altruism.
Cryptocurrency Derivatives
Simply explained, a derivative is any good or contract whose value is based on an underlying asset. Derivatives are based on assets such as equities, bonds, interest rates, commodities, fiat currencies, and cryptocurrencies in traditional financial markets, hence the name.
In the same way that traditional derivatives operate, a buyer and a seller must engage into a contract in order to sell the underlying asset. These assets are sold at a defined price and time. Derivatives rely on the value of the underlying asset rather than having an inherent worth. An Ethereum derivative, for instance, depends on and derives value from the value of Ethereum.
The underlying asset is not held nor owned by derivative deals. Futures, options, and perpetual contracts are the most common derivatives in the cryptocurrency market.
What FTX Exchange offers?
- Over a hundred Spot markets
- Over 250 perpetual & quarterly Futures markets
- ERC20 assets that can give you Leveraged exposure to crypto markets
- Daily, weekly & quarterly move contracts, plus BVOL/IBVOL Volatilty tokens
- Prediction Markets – markets on the outcome of real-world events
- USD, EUR, GBP, AUD, and 7 other Fiat currencies
- Earn rewards by Staking digital assets
- FTX Pay – a fast, secure, and low-fee payment processor
Leveraged Tokens in FTX
Daily Rebalancing
Tokens that have been leveraged rebalance once daily and after being four times leveraged.
Leveraged tokens will lower risk when they lose and reinvest gains when they win due to the daily rebalancing.
As a result, a +3x BULL token will fluctuate around three times as much as the underlying each day. Due to rebalances, leveraged tokens will perform better than the underlying over longer time periods if markets show momentum (i.e., successive days have a positive correlation) and worse if markets show mean reversion (i.e. consecutive days have negative correlation).
Create or Redeem Leveraged Tokens
You can create any of the tokens using USD, and you can exchange any of the tokens for USD.
The underlying futures positions are not delivered; rather, you receive cash in the amount of the market value of the underlying positions. Similar to that, you send USD in an amount equivalent to the market value of the positions that the token owns in order to generate them rather than providing futures positions.
Fees
To produce or redeem a token, you must pay 0.10 percent. A daily administration fee of 0.03 percent is also charged by tokens.
Instead, you will pay the same exchange costs on all other markets if you trade on the spot markets.
Cryptourrency Futures in FTX
BTC, ETH, EOS, XRP, and USDT are just a few of the coins FTX lists as futures. There are three futures contracts associated with each coin: one that expires this quarter, one that expires next quarter, and one that is permanent.
What distinguishes them from other futures?
The following are some ways that the futures published on FTX differ from other significant cryptocurrency futures:
- Stablecoins are deposited as collateral for all FTX futures, and your PNL is settled in them, making FTX futures stablecoin settled. As a result, you receive authentic USD-based price exposure and settlement without the requirement for a bank account, and you can easily switch between different contracts by using the same base currency as collateral.
- A special backstop liquidity provider scheme for FTX futures intervenes to give to accounts in jeopardy of bankruptcy, assisting in avoiding clawbacks.
- To prevent significant market fluctuations, FTX futures contain cautious, calculated margin calls.
Check out our article on Techniques on Trading Cryptocurrency Futures in FTX.
FTX is a relatively new cryptocurrency exchange that has gained a reputation for being a reliable and feature-rich trading platform. It houses a variety of derivatives to trade in the platform. FTX is built both for seasoned traders and cryptocurrency beginners as well.
