FTX: What is all the hype about this popular cryptocurrency exchange platform in Hong Kong?
Cryptocurrency has been gaining a lot of hype recently in Hong Kong and around the world, reaching staggering all-time highs within the past year.
As such, demand for cryptocurrency platforms in Hong Kong that provides a wealth of crypto trading products are also on the rise.
Enter FTX — a cryptocurrency exchange platform that is gaining popularity in Hong Kong. Launched in May 2019, this relatively young platform is owned by FTX Trading LTD, with its headquarters in Hong Kong.
What Is FTX?
FTX is a cryptocurrency derivatives exchange that offers futures, leveraged tokens and OTC trading. It primarily focusses on providing a stable and secure derivatives market for cryptocurrency trading, with innovative products available to buy or sell.
The platform is aimed at traders, rather than investors who are interested in futures trading for main cryptocurrencies like BTC and ETH. Traders can gain access to large-cap coins, exchange tokens, regional baskets, and fractional stock offerings — tokenized products representing shares of firms such as Apple, Amazon, Tesla, and Facebook.
The derivatives available on FTX Exchange include:
- Options: A futures contract that allows the holder to potentially sell at a strike price in the future, usually to mitigate the risks of volatile assets.
- Perpetual Futures: A forward contract that allows the holder to buy or sell at a pre-agreed price.
- Move: A contract that settles using the absolute change in the price of cryptocurrency on a daily, weekly, or even quarterly basis.
- Spot: Market-matched order for a certain asset.
Trading with margin is typically adopted by advanced traders to increase their potential profits by trading much larger positions.
Who Founded FTX?
FTX Exchange was founded by Sam Bankman-Fried, who was previously a trader on Jane Street Capital’s international ETF desk, as well as Gary Wang, who was a former Google software engineer. Before that, the duo founded Alameda Research, a quantitative trading and cryptocurrency liquidity provider.
Bankman-Fried is making waves both inside as well as outside the crypto industry and is now managing both Alameda Research and FTX in his office based in Hong Kong.
FTX was created after successfully raising a total of $8m over three funding rounds, attracting investments from Liquid Value Capital, Binance, FBG Capital, Greylock Partners, Kenetic, One Block Capital, and Proof of Capital.
Is FTX Safe?
Built by leading engineers and backed by crypto fund Alameda Research: FTX brands itself as a cryptocurrency platform built by former Google, Silicon Valley, and Wall Street traders and engineers, for traders. Backed by crypto trading firm Alameda Research that is managing billions in assets, FTX also has security audits conducted by trust third parties like Blockchain Consilium. As such, the FTX platform is safe and secure.
Stablecoin settlement with one universal margin wallet: Traders can deposit stablecoins as collateral for all derivative products, with their PNL is settled in stablecoins. Stablecoins allow traders to get legitimate USD-based price exposure and settlement, without needing a bank account. Instead of posting collateral in multiple accounts and tokens, traders have to post collateral in a single currency on FTX, similar to mature traditional futures markets today.
Less likelihood of clawbacks due to its three-tiered liquidation model: The model is as follows:
- FTX closes positions down carefully with rate-limited liquidation orders in the market.
- FTX has a unique backstop liquidity provider program that provides to accounts in danger of bankruptcy.
- FTX leverages the insurance fund (10% of net profit added to insurance fund) that is meant to cover hacks, security exploits, and other unforeseen events to prevent customer losses.
Now that traders are assured that FTX is as safe as it can get, let’s dive into the different features of this popular cryptocurrency exchange platform in Hong Kong.
Key Features of FTX
Markets: FTX offers perpetual and quarterly futures, spot markets with fiat support, Leveraged Tokens, and volatility products.
101x leverage: FTX offers huge amounts of leverage up to 101x, beating other platforms like Binance, Plus500, and Bybit. Traders with maximum conviction in their positions will have no problem reaching for the moon. For example, a trader that enters a trade with 100:1 leverage can trade a $10,000 position size with $100.
Leveraged tokens: Traders can instantly short or long tokens up to 3x without resorting to margin trade or getting liquidated. Supported tokens include BTC, ETH, BNB, USDT, EOS, TRX, and XRP.
USDT Futures: USDT futures can help many large crypto firms to hedge USDT deltas, given its historical volatility.
Instant updates: Unlike many other exchanges, collateral will also be updated in real time, usually within 30 seconds. So if the trader made a profit, it will be shown almost immediately in the wallet. The trader can use it to open more positions, buy other tokens, or withdraw.
Stablecoin settlements: While USD is the default PnL currency on FTX, traders can freely interchange their supported stablecoins 1:1 as collateral and trade derivatives in one margin wallet.
Quick deposits: Users can top up their trading accounts with USD, EUR, GBP, AUD, & CAD with quick bank transfers, debit cards, credit cards, or even PayPal.
Low fees: Fees on FTX begin at 0.07% and decreases the more that is being traded. To receive lower trading fees, traders can hold on or stake the FTT token, the exchange token of the FTX ecosystem, similar to BNB for Binance, HT for Huobi, and UNI for Uniswap. Tokens are 33% of FTX Exchange fees earned.
Token burn: Approximately one third of all fees generated on FTX will be used for an FTT repurchase. Any FTT bought this way will be burned
A Final Word
FTX is a crypto trading platform that is mainly for leverage trading.
Traders can leverage on borrowed funds to open a long or short position that is greater than their own capital. They can maximise potential profits by increasing their buying power using a small amount of money. As such, every transaction has the potential to be a high stakes transaction.
Users should be aware that using these exchanges can magnify both profits and losses. Profits may be compounded but this also means that it can result in higher losses than expected.
Disclaimer: Readers are advised that content on this website is issued solely for information purposes and not to be construed as an offer or recommendation to buy, hold, or sell any cryptocurrency. All information, opinions, and analysis included are based on sources believed to be reliable, but no representation or warranty is made concerning accuracy, correctness, timeliness, or appropriateness. Please consult an investment professional and do your own due diligence before investing any of your money.