FTX was a centralized cryptocurrency exchange (CEX) that specialized in the derivatives market. The platform also supported spot trading, over-the-counter (OTC) transactions, leveraged and volatility tokens, and staking services. Launched in May 2019, FTX required all users to comply with Know Your Customer (KYC) regulations. Traders from the United States were directed to use FTX US, a separate affiliate platform. FTX provided a volume monitor to track trading performance across global cryptocurrency exchanges.
Core Markets and Trading Products
The exchange placed a strong emphasis on futures markets and leveraged assets. Traders had access to both perpetual and quarterly futures contracts. To help mitigate risk, FTX also enabled trading via several market indices.
Key FTX Trading Indices
FTX offered eight primary indices for trading and hedging:
- EXCH: Comprised exchange tokens such as BNB, HT, OKB, LEO, and FTT.
- DRGN: The Dragon Index included assets like ARPA, BTM, IOST, NEO, NULS, ONT, QTUM, TRX, and VET.
- ALT: The Altcoin Index tracked a basket of large-market-cap altcoins.
- MID: This index followed a range of mid-cap cryptocurrencies.
- SHIT: Composed of numerous low-market-cap coins.
- PRIV: The Privacy Index included various privacy-focused cryptocurrencies.
- DEFI: Tracked a selection of decentralized finance (DeFi) coins related to swapping and exchange protocols.
- WSB: The WallStreetBets Index included assets popular within the r/WallStreetBets community.
Trading Pairs and Fee Structure
FTX trading pairs could be created using several supported fiat currencies, including USD, EUR, GBP, and AUD. Users could choose to pair their trades with their preferred fiat or cryptocurrency on the spot market, which featured over 100 trading pairs.
The exchange employed a tiered fee structure based on a user’s 30-day trading volume. For volumes under $2 million, maker fees were 0.020% and taker fees were 0.070%. Commissions for spot market maker orders were paid in the base currency for buys and the quote currency for sells. Taker order fees were always paid in the quote currency.
Leveraged Tokens
Leveraged tokens were a flagship product, allowing users to gain exposure with leverage of up to 101x. Holders of these tokens paid a 0.10% creation and redemption fee, along with a 0.03% daily management fee. Notably, the platform did not charge fees for futures settlements, OTC trades, wallet conversions, or deposits. OTC fees were built into the quoted price, and futures commissions were charged in USD.
Additional Services and Features
Tokenized Stocks and Equity Trading
FTX allowed trading of tokenized stocks, which represented fractional shares of traditional companies like Tesla (TSLA), Amazon (AMZN), Apple (AAPL), and Alibaba (BABA). These could be traded on both FTX spot and futures markets.
In May 2022, FTX introduced the beta version of its stock trading platform, enabling the trading of non-tokenized equities alongside cryptocurrencies. This service aimed to provide an integrated experience for trading traditional assets, crypto, and NFTs, including access to ETFs and fractional shares.
Benefits for FTT Holders
Special terms applied to users who held FTT, the platform's native utility token. Users holding at least $100 worth of FTT were eligible for trading fee discounts. Those holding over $2 million in FTT could reach VIP Level 3, receiving a 40% discount on trading fees. Market makers could also qualify for rebates of up to 0.0030%, effectively reducing maker fees to zero with a holding of 25 FTT.
NFT Marketplace
Users could list non-fungible tokens (NFTs) on the platform. A self-service listing tool charged a flat fee of $3 per NFT, and a 2% fee was applied to the seller upon any successful sale or trade.
Referral and VIP Programs
FTX offered referral and VIP programs tailored for professional and high-volume traders. Market makers could also participate in the "Backstop Liquidity Provider" program, which involved taking on positions from accounts at risk of bankruptcy.
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Company Background and Growth
FTX was co-founded in May 2019 by MIT graduates Sam Bankman-Fried and Gary Wang. Although initially established in Hong Kong, the company moved its headquarters to The Bahamas by 2021.
In its first year, FTX launched a mobile app and added support for 11 fiat currencies. Its native token, FTT, was listed in July 2019. By its second year, FTX had grown into one of the top five cryptocurrency exchanges by volume. A record was set in April 2021 when monthly trading volume surpassed $400 billion.
In October 2020, FTX expanded its derivatives offerings by adding tokenized stocks, including major companies like Apple and Tesla. By January 2022, the exchange was valued at $32 billion after raising nearly $2 billion in the latter half of 2021—almost doubling its valuation from July of that year.
User growth was equally impressive, with registered users increasing by 60% between October 2021 and January 2022. Daily trading volume averaged $10 billion by early 2022. That May, FTX achieved a significant milestone by surpassing Coinbase in monthly Bitcoin spot trading volume, with over $30 billion traded. FTX's average daily Bitcoin volume exceeded $2 billion, making it the second-largest CEX at the time.
Partnerships and Philanthropy
FTX engaged in numerous high-profile partnerships with traditional sports and esports organizations. In 2021, it signed a $135 million deal to rename the Miami Heat’s home arena to the FTX Arena. A separate naming agreement was reached with esports organization TSM, which rebranded as Team SoloMid FTX.
Additional partnerships included collaborations with the Mercedes-AMG Petronas Formula One team, the International Cricket Council, and Major League Baseball (MLB). In 2022, FTX became the first title sponsor of the MLB Home Run Derby X.
The company was also known for its charitable initiatives. FTX pledged 1% of all cryptocurrency fee revenue to the FTX Foundation, which supported various global charities and causes.
Future Plans and Leadership
FTX had announced plans to launch the FTX Card, a Visa debit card that would allow users to spend their cryptocurrency balances at point-of-sale terminals by automatically converting crypto to fiat.
Sam Bankman-Fried (SBF) served as CEO. A physics graduate and former ETF trader at Jane Street Capital, SBF founded Alameda Research before co-founding FTX. He developed an interest in cryptocurrencies after attending a conference in 2018.
Gary Wang was the Chief Technology Officer. After studying mathematics and computer science at MIT, Wang worked as a software engineer at Google, building price aggregation systems for flights. Both Wang and Bankman-Fried were listed among Forbes' top five wealthiest cryptocurrency and blockchain billionaires in 2022.
Frequently Asked Questions
What was FTX known for?
FTX was primarily recognized as a derivatives-focused cryptocurrency exchange that offered sophisticated trading products like leveraged tokens, futures contracts, and tokenized stocks. It also provided spot trading, OTC services, and an NFT marketplace.
Could US-based traders use FTX?
No, users from the United States were restricted from using the international FTX exchange. They were directed to FTX US, a separate platform compliant with U.S. regulations.
What was the FTT token used for?
FTT was FTX's native utility token. Holding it provided users with benefits such as reduced trading fees, higher leverage options, and participation in token sales. Large holders could achieve VIP status with significant fee discounts.
Did FTX charge fees on deposits?
FTX did not charge fees for deposits, futures settlements, OTC transactions, or wallet conversions. Revenue came mainly from trading, NFT sales, and leveraged token management fees.
What were FTX's most notable partnerships?
The exchange had major naming rights agreements with the Miami Heat’s basketball arena and the TSM esports organization. It also partnered with Mercedes-AMG F1, the International Cricket Council, and Major League Baseball.
Did FTX have a charitable program?
Yes, FTX committed 1% of all fee revenue to its foundation, which donated to effective charities worldwide. This initiative was part of the company’s commitment to social responsibility.