8 Basic Facts About FTX

I wrote here the other day about my dilemma in regards to whether I should practise minimalism to simplify my life or diversification to benefit from the full array of benefits afforded by various crypto exchanges. Well, it turned out that I would go along with diversification for now because I needed another crypto exchange to solve my current problem. 

All this while, I found myself in a pickle because I had converted my AMPL earnings on PUBLISH0X to ETH on Kucoin, not realising that the withdrawal fee for ETH was so prohibitively and outrageously high. Sugarfix suggested that I do this. I'm sure he wouldn't mind me quoting his words in full :P

I always believe that the Universe will ensure that all the stars in your life are aligned so that teachers/mentors will appear at your side whenever you articulate a problem. Not long after I received the above advice from Sugarfix, I found his recommendation echoed by another forum poster on a different website.

So I decided to take action and find out some basic facts about FTX. I will set up an account with FTX as soon as I receive my work laptop that will allow me to utilise the webcam and clear my KYC!

1) FTX was founded by 29-year-old Sam Bankman-Fried. Possessing a spot in Forbes' List of 30 Under 30 - Hall of Fame 2022, he has honed his niche in trading. For one, FTX differentiates itself from its counterparts by specialising in derivatives (in fact, FTX's full name is FTX Cryptocurrency Derivatives Exchange) and trading on leverage (the use of borrowed funds to boost trades). For another, he is the co-founder of Alameda Research, a quantitative trading firm that aims to provide liquidity to global crypto markets.

2) Founded in 2019, FTX was originally headquartered in Hong Kong. But in 2021, it shifted its headquarters to the Bahamas because the Bahamas has a welcoming stance towards cryptocurrencies in terms of regulatory frameworks. 

3) I was surprised to learn that Temasek Holdings, arguably Singapore's most prominent global investment firm has a stake in FTX! Apparently, FTX raised $420 million in its latest round of funding from a total of 69 investors - and Temasek Holdings is one of them! Blackrock is another investor which has thrown its might behind FTX. As such, FTX is valued at $25 billion now.

4) Any self-respecting crypto exchange will launch its native token and of course, FTX is no exception. FTT token enables customers to reduce trading fees and earn interest. This token is also given to holders as a reward in the form of redistributed returns from the FTX Insurance fund. However, this token is not available in the United States. As of 12 December 2021, it is ranked 29th on CoinMarketCap with a live market cap of $6,142,636,675 USD.

5) For experienced crypto investors, FTX offers several attractive options, including prediction markets, perpetual futures on 29 cryptocurrencies, a liquidation engine and a backstop liquidity provider system that allows you to handle margin calls, and ERC20 leverage tokens that enable you to have leveraged exposure to crypto (3x and 10x long positions as well as 1x, 3x and 10x short positions). Please note that leverage can be a dangerous master, so don't immerse yourself in it if you aren't 100% crystal-clear sure of what you are doing!

6) Crypto enthusiasts flock to FTX to benefit from its tiered fee structure that allows them to pay much lower trading fees than FTX's competitors. Trading fees can hence be as low as 0.06! In the words of Sam Bankman-Fried himself:

The amount you pay depends on your 30-day trading volume. It (FTX) also has a maker-taker model. You pay the taker fee on orders at the market price that are filled immediately and the maker fee on orders that aren’t filled immediately

FTX also incentivizes trading as it offers a fairly impressive 261 trading pairs. It also has a safety mechanism in place that prevents you from getting your hands burnt via leverage as it boasts various order methods to assist you in executing sound entry and exit strategies

7) If you are a American investor and feel a sense of FOMO because of the inability of buy FTT tokens, perhaps the knowledge that FTX has launched the Marketplace for FTX NFTs might soothe those frayed spirits a bit. The Marketplace adds spice to your crypto life by letting you mint, hold and trade NFTs, not just on the Solana blockchain, but also on the Ethereum network

8) In August 2021, FTX acquired LedgerX, a regulated U.S.-based crypto derivatives firm. Moving forward, it intends to expand its empire by acquiring local crypto exchanges so that it can venture into new jurisdictions.It is also not resting on its laurels as it has already purchased an ad for the Super Bowl that is slated to be aired in February 2022 so as to widen its reach to U.S. audiences. 

Are you invested in FTX yourself?