This is a sponsored cryptocurrency guide by FTX
In 2019, the number of cryptocurrency derivatives exchanges listed on CoinGecko grew from 3 to 25 exchanges. Derivatives are gaining traction amongst crypto traders because it allows one to manage their risk, trade at a lower cost and with less capital, and easily sell short.
Derivatives are financial instruments (contracts) whose values are derived from an underlying asset. When someone trades derivatives, they are buying/selling contracts that represent the actual assets. They are used primarily for hedging purposes, specifically when traders want to protect themselves from price fluctuations. For an introduction to derivatives, check out our 101 here: CoinGecko’s Beginner Guide to Crypto Derivatives
“Built for traders, by traders.” A Brief History of FTX.
Launched in May 2019, FTX (https://www.ftx.com) is an Antigua and Barbuda-based derivatives exchange that offers access to over 204 trading pairs. Over the next three CoinGecko buzz posts, we’ll be deep-diving into their platform and their various product offerings.
FTX offers Perpetual Futures Contracts, Leveraged Tokens, MOVE Contracts and OTC trading. The team behind the exchange, Alameda Research, is one of the largest market makers in the crypto sphere. They have experience managing over $100 million in digital assets and trade between $600 to $1.5 billion per day across thousands of products.
Recognizing that there are many flaws holding the space back, the team developed FTX with the mission to provide a “platform powerful enough for professional trading firms and intuitive enough for first-time users.” FTX was the first in the crypto market to introduce Index Futures.
FTX recently announced their strategic partnership with Binance - their first and only outside investor. FTX has partnered with Binance to provide liquidity across their entire product suite, including Binance.com, Binance OTC, and Binance.US. This underscores their efforts to continue to work together on the Binance and FTX markets, which are already the world’s most liquid spot exchange and the world’s most liquid derivatives exchange.
About the Team
FTX’s team has years of experience working in Wall Street quant funds and tech companies including Jane Street Capital, Optiver, Susquehanna, Facebook and Google. The team is distributed with employees all over the globe. FTX, together with Alameda Research, has pledged to donate a substantial fraction of its earnings to the world’s most effective charities.
Sam Bankman-Fried, CEO
A Physics graduate from MIT, Sam was a trader on Jane Street Capital’s international ETF desk. He traded a variety of ETFs, futures, currencies, and equities, and designed their automated OTC trading system. Sam left Jane Street Capital in late 2017 to start Alameda Research. After trading on dozens of exchanges and identifying multiple issues, he decided to start FTX in early 2019.
Gary Wang, CTO
Prior to co-founding Alameda and FTX, Gary was a software engineer at Google where he built systems to aggregate prices across millions of flights decreasing latency and memory usage by 50%. He is a Mathematics with Computer Science graduate from MIT. Gary took charge in writing the first trading systems for Alameda and then shifted to the FTX side and took the lead on building out the exchange product.
Though relatively new, FTX’s unique products have helped spur its rapid growth:
FTX has quarterly and perpetual futures on 29 different cryptocurrencies. These include major cryptocurrencies such as BTC, ETH, ETC, BCH, BSV, USDT, BNB and LEO.
FTX’s unique liquidation engine and backstop liquidity provider system provide a three-step solution to handle margin calls and preventing clawbacks. Visit here for more information: Liquidation Engine
Centralised Collateral Wallet
Unlike other derivative exchanges, FTX offers a centralized collateral wallet makes trading on their platform simple and efficient.
First in the market, FTX allows you to trade entire sectors of the cryptocurrency ecosystem from large-cap coins to exchange tokens to regional baskets.
FTX’s leverage tokens free you from micromanaging your collateral or risk. They are ERC20 tokens that have leveraged exposure to crypto (3x and 10x long positions as well as 1x, 3x and 10x short positions). Their BULL and BEAR leverage tokens automatically manage their exposure, rebalancing to maintain their target leverage and prevent liquidations. As they ERC20 tokens, you can withdraw them from the platform and trade them.
FTX’s industry-first MOVE contracts are futures that expire to the raw amount BTC moves in a time period. This allows users to trade on the amount BTC is going to move without having to know the direction. FTT is the FTX ecosystem’s utility token. Holders of FTT receive numerous benefits, including:
- Weekly buying and burning of fees
- Lower FTX trading fees
- OTC rebates
- Collateral for futures trading
- Socialized gains from the ins
- Insurance fund
We will take a more in-depth look at the FTX’s Leverage Tokens, Move & FTT Token in Parts Two & Three of this series.
Getting Started Accessing
FTX is easy - you can access the platform from your computer browser or mobile phone using their iOS or Android App. In this guide, we’ll be sharing with you how to set up your account using your computer. As with all transactions, we recommended that you use incognito mode on your browser of choice for the best performance.
Setting up an FTX account image
Click ‘Register’ and key in your email and password. It’s that simple!
Set up 2-Factor Authentication
Know-Your-Customer (KYC) Requirements
FTX is beginner-friendly as it does not require KYC verification to get started. Without KYC, you can withdraw up to USD 1000. With basic Tier 1 KYC (Email, Name and Country of Residence and region/province), you can withdraw up to USD 2000 per day. Should you plan on trading more, we recommend that you complete Tier 2 KYC verification for unlimited crypto withdrawals.
The following are the KYC forms:
Tier 1 KYC Form (USD 2000/day withdrawal) image
Tier 2 KYC Form (Unlimited crypto withdrawals)
Note: FTX engages Chainalaysis to monitor suspicious cryptocurrency transactions. All deposits and withdrawals are subject to inspection using Chainalaysis and FTX reserves the right to request additional information.
FTX’s interface is similar to other trading platforms but with additional features catered to derivative traders.
1) Cryptocurrency Selector
When you scroll over a particular cryptocurrency, you’ll be able to select the various Futures, Move Contracts, Spot or Token products related to it.
2) Candlestick Chart
The Candlestick Chart depicts the price movements of the trading pair., showing how far and the direction the price of an asset is moved during a specific time period. Each “candlestick” shows one day. To learn more, here’s our recommended reference: Introduction to Candlesticks
3) Crypto & Wallet Info
This section shares relevant information depending on which asset you’re interested in trading.
When you select a Perpetual, Move or Futures Product, you will be given provide an option to select the Max account leverage ranging from 1x to 101x.
An Order Book refers to the list of open orders arranged at different prices. This also refers to the market depth, which can give you a sense of the market’s liquidity, i.e., how much can you buy before your orders start affecting the market price of the asset.
5) Place Order
FTX allows you to execute 6 types of orders:
Limit Order (An order to buy/sell at a specific price)
Market Order (An order to buy/sell at market price)
Stop Market Order (An order to execute market order once an assets reach a price)
Stop Limit Order (An order to execute limit order once an asset reaches a price)
Trailing Stop Order (Set the stop price at a fixed amount below the market with an attached ‘trailing’ amount)
Take Profit Order (Like for a Stop-loss order, you directly input the trigger price when creating a Take profit order. If you are buying, the order will get sent when the market price drops below your trigger price. If you are selling, the order will get sent when the market price exceeds below your trigger price).
6) Market Trades
Market trades shows all the trades that occurred within the asset’s market by traders across FTX’s userbase.
7) Check Balance, Open Orders, Trigger Orders & Trade History
Similar to other trading interfaces, you can check for any open orders (Orders that are currently live and not executed), order history (orders that have been executed), as well as a summary of all the assets you currently own. What is unique to FTX is that you can also see your Trigger Orders. When a trigger order becomes triggered, it’s possible for the order it sends to fail. The account may not have enough margin, price bands during sharp market moves might prevent market orders from matching against other orders, etc. In these cases, it may be preferable to retry sending the triggered order until their overall triggered order size is filled. Retried triggers will only be sent when the standard conditions around mark price and trigger price are met. You can see the result of each trigger on the Trigger Order History page by clicking the “+” button on any trigger order set to Retry to view all its triggers.
There are two types of fees on leveraged tokens:
Creation & Redemption Free: 0.10% (Note: You only pay this if you create/redeem, not if you buy in a spot market or convert)
Management Fee: 0.03%/day on leveraged tokens. This is just taken out of the nett asset value of the leveraged token.
Click on "Withdraw" which allows you to withdraw balances to an ERC20 wallet address
FTX’s Unique Strengths
As one of the largest crypto market makers, the team behind FTX has used their experience trading to build a comprehensive platform. Some of their unique propositions include:
Clawback Prevention: Using their liquidation engine a three-tiered liquidation model), FTX significantly reduces the likelihood of clawbacks occurrences.
Centralised Collateral Pool & Universal Stablecoin Settlement: FTX derivatives are stablecoin-settled and require only one universal margin wallet
Innovation: FTX is constantly developing new products (such as Leveraged Tokens) to fulfil the evolving needs of the market.
Conclusion - Professional and Intuitive
Ideal for both budding and seasoned traders, FTX’s offers a new spin on the nascent but promising cryptocurrency derivatives markets. As the market forces behind cryptocurrency becomes more advanced, the derivatives market is only set to grow and mature. Given the complexity of derivatives, we recommend that you exercise caution when trading.
Stay tuned for Parts Two and Three where we will elaborate on how to trade perpetual, moves and futures on FTX.
This is a sponsored cryptocurrency guide by FTX
Senior Business Development Gecko. Aimann is wired by the future that blockchain and the decentralised movement brings to the world. Follow the author on Twitter @aimannfaiz