Daily volume on some of altcoins with x101 leverage

No, it’s not another ‘brand new’ BitMEX clone. It’s not Binance either.

It is actually kind of both, with even higher potential.

Exchange FTX was created the biggest crypto market maker — Alameda Research. If you don’t know who are they, you can check BitMEX leaderboard:

They created platform which offers 6 unique features you might never find on other exchanges, plus x101 leverage on low cap coins.

Interested to know more?

- Basic information

- Pros & unique features

- Cons

- Conclusion

Basic information

FTX exchange was created by the team from Alameda Research. These guys’ business is Market Making— they provide limit orders both on the buy and sell side, allowing other traders to enter and exit positions easier.

Long story short, these guys are masters in providing liquidity, so it was logical decision to make an exchange with proper liquidity on it.

Pros & unique features

This exchange has a lot of “standard” products — good OTC desk, futures, perp futures, x101 leverage, etc. But I want to outline few outstanding features:

1. Shared collateral balance

BTC, USD, USDT, BUSD, ETH, BNB and FTT balances could be used for trading purposes, without the need of converting it to the USD. ‘Virtual’ conversion happens automatically, all profits paid in USD, any losses will be eventually converted from said collateral to the USD.

It allows you to store your favorite coins without need to converting it to USD.

This is especially funny mechanism with native FTT token, (see further for more details)

2. Gradual liquidation engine

Unlike other competitors, when price of asset reached liquidation value, you usually will not be instantly liquidated on FTX. Upon reaching liquidation, some of your position will be closed, and another portion will remain open, unless price moved too much. This process repeats time after time unless you eventually run out of money. Even more, if market is not too volatile on moves, (partial) liquidation could be delayed for few seconds, giving price small opportunity for rebound

This is helpful for situations when your liquidation happens almost near the edge of the price movement — if price suddenly reverses after reaching your liquidation level, you will still keep part of opened position.

3. Great liquidity on futures.

Order book depth on the BTC March 2020 futures

Quarterly futures notorious by its low liquidity on many platforms. If you ever held 200k+ worth of futures, you probably know that feeling. FTX provides similar amount within 1–3$ range almost at any point of time.

On other platforms, closing such amount on market will result in 10$ slippage, if not 30$ in some cases.

4. Profit and losses from the opened positions recalculated every 30 seconds and added to the balance.

This profit could be reinvested back to the already opened position to increase it in size, even above original max margin requirements (max degen style).

Additionally, funding rate is calculated and paid on hourly basis, instead of 8hr window.

5. FTX is USD centric exchange.

All profits and losses are calculated and released in USD stable coin, plus exchange offers variety of products to hedge BTC risks. Some might consider this as disadvantage, but you can always convert everything back to BTC if needed. At the same time, if you collateral in USD, you are basically ‘hedged’ vs crypto down movements.

6. Unique products.

- Index altcoin futures which allows to invest into several coins within one instrument, with automatic rebalancing. Great liquidity.

- Margin trading up to x101 on many altcoins (though liquidity might be an issue on some pairs)

- Volatility contracts (MOVE). These are advanced products which allows to bet on volatility, disregarding direction of the move. If you experienced with options — this is straddle.

- Leveraged tokens (x3 — x10) which is alternative way of leverage trading but with different rules.

- FTT native exchange token — it allows to get discount on fees. Also FTX itself buy and burn FTT token on market with the following proportion:

33% of all fees generated on FTX futures

10% of net additions to the insurance fund (‘Socialized Gains’)

5% of fees earned from other uses of the FTX platform

Exchange cons:

Still, there are some cons in this new exchange.

- No negative fees for the market makers (limit orders). As FTX founded by one of the biggest cryptocurrency market maker in the market they seem to does not need to attract market makers other than themselves.

- Despite of the good volume on the BTC pair, the other pairs are low on volume. It is true for all but biggest caps (where liquidity is actually great).

Probable reason is that they offer x101 leverage even on very small cap coins, but still doesn’t change the fact that even 10k$ order might move price to 1–1.5% on those.

- Unstable orderbook at times

Prices might flicker a lot sometimes giving you epilepsy. Still, slippage is acceptable for the most cases.

- As there is no negative fee, overall fees (even with all discounts) might be bigger than competitors:

If you only use up to x20 leverage, market order will cost you 0.07% (comparing to 0.075 on BitMEX). Referral bonuses, holding FTT tokens and big trader volume can even bring it to around 0.05% for marker orders.

However if you want to trade with bigger margin, or use lesser maintenance margin (instead of standard 3%) you’d have to use x50 leverage setting, which increases all fees by 0.02%.

- Liquidations and all market triggers based on market price. In order to avoid cascade liquidations and market manipulation, FTX implemented a lot of circuit breakers: max order size shall be no more than 2% than order book, price bands within 20% of medium price, etc.

Still, there is no option to use index price as a reference, and on illiquid pairs, market stops might be an issue

Lack of UI polishing

Though team is constantly working on improvements there.

Conclusion:

I am not saying that this exchange is perfect in all senses — it is still in development and many features being fixed/added every week. Exchange has its weaknesses but in my opinion, unique features outweighs its problems.

I feel like it has a lot of potential and might be the best place for swing traders with big volume. Day trading there might be a bit more costly, but from other side — what other exchange will allow you to trade DOGE on x101 margin?

Hope you enjoyed analysis — I tried to make it maximum objective.

If you want to check exchange yourself, you can use my referral link to get 5% discount on fees https://ftx.com/#a=rule246

To get in touch or know more details you can ping me in twitter there:

https://twitter.com/rule246

Or just post comments there — I am happy to fix article if there are any errors.