FTX has made waves within the cryptocurrency industry in recent months. Its vast array of products and features in combination with its deep liquidity have enticed many cryptocurrency traders to sign up for the platform.

In this article we hope to answer the question; is FTX the best up and coming exchange? And if so should you sign up for it?

Review in Summary

Founders Sam Bankman-Fried, Gary Wang Location Antigua and Barbuda Available Markets 30+ Perps, 60+ Futs, Leverage Tokens, Options KYC and AML Required for Withdrawals above 2500$ a Day Can U.S Users Sign Up? US users can sign up for FTX.US but not FTX.com Trading Fees 0.02% Maker, 0.07% Taker Max Leverage 101x

In this review of FTX we will assess the exchange based on 4 key criteria. Safety, Security, and Regulation. Trading Fees. Markets and Standout Features, and finally Ease of Use. We will conclude by giving our conclusion and score rating.

You can use the contents table below to navigate to the section most relevant to you.

About FTX

Founded by Sam Bankman-Fried and Gary Wang. FTX launched in 2019. Both founders graduated from MIT. Sam progressed on to join a quantitative trading firm known as Jane Street. While Gary became a software engineer at Google aggregating prices for their Google Flights service.





Their combined knowledge in both pricing systems and quantitative trading is what brought them both into the cryptocurrency realm. In the midst of the 2017 bull run they founded their own quantitative trading firm known as Alameda Research which set out to employ quantitative trading methods in the cryptocurrency market. This firm grew to become one of the largest trading firms in the crypto market. Currently doing over $600 million in volume a day.

In an interview with Venture Coinist Sam outlined that it was the launch of Alameda Research which triggered their inspiration to launch their own cryptocurrency exchange. Citing that trying to use these other exchanges was frustrating and tiresome and they thought they could bring something much better to the cryptocurrency market.

Safety, Security, and Regulation

Account Security

FTX has industry standard support for Google 2 factor authentication (2FA). 2FA enables users to add an extra layer of security to their account. After entering both their email and password users are asked to enter a 6 digit randomly generated pin from the Google Authenticator app. This ensures that should a bad actor have access to both your email and password he will still not be able to gain access to coins stored on the exchange. 2FA is compulsory on FTX.

FTX also supports additional withdrawal passwords which require users to enter an additional password to withdraw. This password is different from the one users use to log and adds an additional layer of security.

One feature which is absent on FTX but present on other exchanges is the ability to whitelist certain IP addresses. So you can only login from a certain IP. However this is not a deal breaker and may be only useful to a small percentage of users.

Platform Security

Since its foundation FTX has not had a breach in either customer funds or data.

FTX uses cold storage to ensure the safety of user funds. Cold storage means that the keys to the coins stored in FTX wallets is kept offline away from potential hackers. A smaller fraction is then kept in what are called hot wallets which are connected to the internet. These hot wallets facilitate day to day transactions on the exchange such as withdrawals.

Platform Stability

The stability of FTX has overall been very good. The platform had a few teething issues when first starting out however these have been largely ironed out. The platform like its competitors still goes down occasionally but these are rare.

KYC and AML

FTX’s KYC policy is similar to other platforms and easy to understand. There are four levels of KYC. You increase your KYC level by providing more verification and documents. By increasing your KYC level you will be allowed greater withdrawal limits, and the ability to deposit FIAT currency and buy Bitcoin directly through the exchange.

When you first register, create your account, and confirm your email you will be at level 0. This level gives you a lifetime withdrawal limit of up to 1000$. You will be unable to withdraw more once you reach this cap.

Level 1 requires you to provide your name, country of residence and your local province. FTX do not ask for documents at this level. At level 1 you gain the ability to withdraw up to 2500$ a day. However, if you trade more than the sum of all your deposits and withdrawals you can withdraw up to 9000$ a day.

FTX Identity Verification

Level 2 requires you to provide your full legal name, date of birth, proof of address, the source of your assets, passport or other government ID, and a picture of yourself holding your ID with the date and a piece of paper with ‘FTX’ written on it. Once completed you are allowed unlimited crypto withdrawals.

Finally, to complete level 3 you need to finish all previous levels and to now provide a recent proof of address and, to provide a recent bank statement. Once this is done you gain the ability to wire money to FTX and buy crypto directly on their FIAT markets.

Completing the steps is relatively easy once you have the documents for level 2 and 3 at hand. Simply navigate to the KYC page in your settings tab. Once your application is submitted FTX staff typically review your application within 24 hours.

Regulation

FTX.com does not currently accept users residing in the US. However the newly launched FTX.US does.

FTX is registered under FTX Trading LTD which is incorporated in Antigua and Barbuda. The registering of FTX here may raise some red flags to some but this practice is common in the cryptocurrency industry and some might say is necessary in order for an exchange to succeed. Strict regulatory guidelines in larger jurisdictions such as the US and EU make it almost impossible for exchanges to operate well and so a large percentage of companies register where financial regulation is more relaxed.

However there may still be some regulatory uncertainty’s with the platform. Earlier this year FTX launched a market which US regulatory boards may not approve of. The market in question is FTX’s crude oil futures market.

Back in 2018 the CTFC which regulates commodity trading in the US sued a cryptocurrency CFD platform which enabled users to trade oil and gold with Bitcoin. The domain was also seized by the FBI.

Seizing of 1Broker.com by the FBI

FTX has strict warnings that prohibit users trading oil if they are from a prohibited country. So I doubt the same faith awaits them as 1Broker but it is worth keeping in mind.

FTX OIL Futures Warning

Trading Fees

Trading fees on FTX are tiered based on on how much you trade. The more you trade the less your trading fees will be. For example if you trade less than $1 million in 30 days your taker fee will be 0.07% while if you trade more than $1 million your taker fee will be 0.06%

See the table below for the full fee list. Maker fees represent what an order would cost if you used limit orders to fill your order. While the taker fee represents the fee if you used a market order.

Tier 30 Day Volume (USD) Maker Fee Taker Fee 1 0 0.02% 0.07% 2 >1m 0.02% 0.06% 3 >5m 0.015% 0.055% 4 >10m 0.015% 0.05% 5 >15m 0.01% 0.045% 6 >35m 0.01% 0.04%

FTX also has their own exchange token known as FTT. Holders of this token also get fee reductions based on how much tokens they hold. See the table below for the full benefit of holding these tokens.

FTT Holding (USD) Discount on FTX Fees Other Privilege $100 3% N/A $1000 5% N/A $5000 10% N/A $10000 15% N/A $50000 20% N/A $100,000 25% N/A $200,000 30% N/A $500,000 35% N/A $1,000,000 40% Become tier 4 $2,500,000 50% Become VIP $5.000,000 60% Become VIP 2

FTX has a number of atypical trading products such as their leveraged tokens. We will address these products later in our review. These leveraged tokens have a creation and redemption fee of 0.10% and a daily management fee of 0.03%.

Using leverage of over 50x increases trading fees by 0.02%. Using leverage over 100x increases trading fees by 0.03%. These additional fees are paid to the insurance fund rather than FTX. Adding directly to the insurance fund is done to prevent socialized losses like what happened with margin trading on OKex in 2018.

Withdrawal Fees

Another factor to consider when using a platform is deposit and withdrawal fees. On FTX there are no fees for depositing or withdrawing money. If you decide to withdraw Bitcoin you will only have to pay network fees.

FTX Fees in Comparison to the Competition

Due to the tiered nature of FTX’s fee structure it is harder to make a direct comparison to another exchange which has a flat fee. But if we assume the lowest fee tier of less than 1m$ in trading volume FTX fees are by and large more expensive than those of their main competitor, BitMEX. However, If you trade more than $1 million in thirty days your fees will be lower than the example provided here.

Exchange Maker Fee Taker Fee Total Fee FTX 0.02% 0.07% 0.09% BitMEX -0.025% 0.075% 0.05%

BitMEX has a flat fee regardless of trading volume of -0.025% for maker and 0.075% for taker. The negative maker fee means you will receive a rebate for adding liquidity. This is considerably better than FTX’s 0.02% fee. The taker fee on FTX however is lower by 0.005%.

The justification FTX makes for its higher fees is that if you widen the spread between maker and taker fees you will inevitably widen the spread between the bid and ask in the order book. They state that market makers will shift their positions to compensate for the spread in maker-taker. In summary you will either pay the fee in the spread on the exchange or in the fee charged.

FTX does want to incentivize people to provide liquidity–doing so means taking the risk that prices will move against your order. But we want to make sure that we don’t make markets artificially wide, which is why our maker – taker spread is significantly lower than many of our competitors. FTX

Similarly both BitMEX and FTX charge no fees for withdrawals or deposits.

Markets and Standout Features

Trading Pairs

FTX has the widest variety of trading pairs perhaps out of any derivatives exchange in crypto. Currently having over 50 trading pairs. Each of these trading pairs typically has both a perpetual swap contract, variety of futures contracts and a spot market where you can trade directly in US dollars.

Selection of FTX Markets

In comparison to BitMEX which only has 8 trading pairs FTX is streets ahead.

Leveraged Tokens

Not only does FTX have a wide variety of pairs it also has unique products which are not available anywhere else. One of these products are leveraged tokens.

These leveraged tokens give exposure to certain cryptocurrencies with leverage of up to 3x to the upside or downside.

Leveraged Tokens Market

FTX gives three potential reasons as to why using leveraged tokens might be better than simply using leverage to buy or sell an asset:

The first reason is that leverage tokens make it easier to manage risk. Leveraged tokens give traders the opportunity to use leverage without paying too much attention to managing leveraged positions. This is because the leveraged tokens manage leverage themselves without the need for trader input. FTX gives the example below.

BULL/BEAR/HEDGE tokens will automatically reinvest profits into the underlying asset; so if your leveraged token position makes money, the tokens will automatically put on 3x leveraged positions with that. Conversely, BULL/BEAR/HEDGE tokens will automatically reduce risk if they lose money. If you put on a 3x long ETH position and over the course of a month ETH falls 33%, your position will be liquidated and you will have nothing left. But if you instead buy ETHBULL, the leveraged token will automatically sell off some of its ETH as markets go down–likely avoiding liquidation so that it still has assets left even after a 33% down move. FTX

The second reason is managing margin. Leveraged tokens will manage their own margin. You can simply buy $10000 of BTCBULL which gives you exposure to 30000$ of Bitcoin. If price sharply declines 33% chances are you might be liquidated, but your maximum loss can not exceed 10000$ and you did not have to worry about your liquidation price or collateral.

Leveraged tokens have gone to zero before where the automated system which maintains them could not catch up with an extremely sharp decline in price. But this is rare as the automated system typically can begin to sell off exposure before liquidation.

The final reason given by FTX as to why using leveraged tokens is beneficial is that they are ERC-20 tokens based off the Ethereum blockchain. This makes them transferable too. So you can keep them off the exchange in an Ethereum Wallet for example. It brings up an interesting use case where you could keep 30000$ of a Bitcoin long in an Ethereum wallet.

There are leveraged tokens for every market on FTX.

Indices

Alongside all the variety of tradeable markets on the exchange there are a number of cryptocurrency indexes curated by FTX themselves.

Some examples of these indexes are their EXCH-PERP, PRIV-PERP, and ALT-PERP. The EXCH-PERP is an index of exchange tokens such as Binances BNB, Huobi Token, and Bitfinexes LEO token and others. The PRIV-PERP is a basket of 9 different privacy coins like Monero, Komodo, and Zcoin. While their ALT-PERP is an index of a number of high ranking altcoins.

These index products are incredibly convenient for traders and investors who are bullish on certain sub sections of the cryptocurrency market to gain exposure. For example if I am an investor who is bullish on privacy coins I can gain exposure to all of them in one market rather than have to buy and manage them all separately.

Options

The demand for more complex derivatives in crypto has increased over the past few years and FTX is helping to fill that demand with its options markets.

Users can request quotes directly through the options market tab. Here users can request quotes for calls and puts or make bids on other users requests for calls and puts. There is also a convenient graph on how profit and loss for a chosen option will work.

Options PnL Graph

Alternatively users can trade FTX’s volatility markets. There are currently 3 main types of volatility contracts. MOVE contracts, BVOL, and IBVOL.

Move markets for those familliar with options trading are essentially call straddles. This is a type of options trade where you buy a put option (betting price will fall) and buy a call option (betting price will go up). The result is that traders will profit from a volatile move in price as long as the move is sharp.

Move contracts work somewhat similarly where they will expire to the absolute value of the change in the price of BTC over a specific time period. That time period varies based on what move contract you choose. There are move contracts for the day, the next day, the week, and all the way up to a few months away.

There are also BVOL and IBVOL. Both are erc-20 tokens similar to leveraged tokens however they either track 1 times the the implied volatility of Bitcoin (BVOL). Or, -1 times the implied volatility of Bitcoin (IBVOL). Implied volatility is a metric which tracks the markets view of a change in an assets price.

Exotic Crypto and Non-Crypto Markets

If the previous trading markets were not enough FTX has also began to list markets which you might have not even considered. One of these is its new hashrate futures market.

Just launched before the recent halving, hashrate futures allow traders to long or short what they believe Bitcoins hashrate will be at a specific date. There are a variety of futures expiring from 6 months away to 18 months.

The futures contracts expire to the average difficulty value of blocks mined divided by 1 billion.

These contracts can be useful for pure speculation. Or miners can use them to hedge. The market is in its infancy so it will be interesting to see how traders use them to their advantage.

FTX has also began to dabble in non-crypto markets. One of these non-crypto markets we have mentioned earlier and its FTX’s crude oil market. Previously we have discussed it in regard to its potential regulatory risk. However if you are in a jurisdiction in which trading crude oil on FTX is allowed it may be worth dabbling it.

Gold also has a market on FTX through its Tether gold perpetuals. Tether Gold (XAUT) is similar to USDT in that it is simply a token which is backed by a real world asset. In USDT’s case a dollar, in XAUT’s case an ounce of gold.

Traders can trade the price of gold through XAUT the same as they would on a traditional financial exchange. It being a token backed by gold also means that it is free of the regulation that FTX’s oil market is shrouded in. If you’re allowed sign up to FTX you can trade XAUT.

FTX has also began experimenting with prediction markets, launching for the 2020 American Presidential Campaign. Here traders can bet on who they believe will be elected.

Each presidential candidate has a market which varies between 0$ and 1$. If the candidate wins the contract expires at 1$ while if they lose it expires at 0$. The variance between 0$ and 1$ in valuation represents what traders feel the probability of a certain candidate being elected is.

If you’re informed on US politics you can imagine how the valuation of some candidates has gone.

President 2020 Markets

Trading Competitions

FTX has also set its self aside from its competition by doing regular large scale trading competitions. These competitions often have large prize pools making them incredibly competitive.

As an example the current competition titled ‘Man vs Machine’ puts regular traders against quantitative traders to decide who is best. Regular traders must trade through the platform while quantitative traders must trade through the API or Quant Zone.

There are individual prizes top traders on both teams as well as team prizes for the winners.

Quant Zone

For those with an interest in programming or quantitative trading you may want to look into Quant Zone. FTX’s attempt at trying to make quantitative trading easier.

Quant Zone allows you to create trading algorithms directly on the platform, without the need for API’s. Within the Quant Zone interface users can create trading rules and actions. These trading rules and actions can then make up your very own quantitative trading strategy.

Your trading strategy can be as simple as shorting Bitcoin when it is over 10000$ or you can create something much more refined and sharp.

FTX Quant Zone

This is what is available now but in future iterations FTX plans to launch a number of new features. One said feature is the ability to create your own trading program and then share it with other users. When these traders then use your program you will earn a portion of their fees.

Mobile Apps

FTX has both an app for Apple and Android devices so users can monitor and manage trades on the go.

The app is not the most intuitive mobile experience but it does what it needs to do.

FTX Android App

Liquidity

Liquidity is perhaps the most important force behind whether an exchange will be successful or not. Having no liquidity creates a sort of exchange death spiral. If you have no liquidity you will not attract users to sign up, and if you have no users you won’t attract liquidity. You can have the best trading platform in the world, but if you have no liquidity its nothing but a tech demo.

FTX however never fell into the liquidity death spiral that many other smaller exchanges fall into. From the get go FTX had the advantage of coming from Alameda Research, one of the largest liquidity contributors in the cryptocurrency industry. On day 1 the exchange had great liquidity.

Not only were Alameda providing liquidity but so too were other liquidity providers. FTX went out of their way to recruit other liquidity providers and trading firms in the crypto space.

FTX Partners

Liquidity on FTX still remains very strong. On larger pairs such as Bitcoin and Ethereum you will typically have no problems with getting orders filled. Volume on FTX is typically lower than other large exchanges such as BitMEX and Binance but this is unlikely to negatively affect you unless you trade very large sizes.

As you go from Bitcoin and Ethereum down to the smaller altcoins volume begins to decline but this is the case with every exchange. However, again if you plan on trading altcoins with large size you may want to keep it in mind.

Ease of Use

Trading Experience

The trading experience on FTX is much like that of any other derivatives exchange. If you have used other platforms like BitMEX you will be right at home.

Even if FTX is your first experience with cryptocurrency trading it is all largely intuitive.

You can search through the markets in the markets tab and select the one you want to trade or alternatively you can use the search bar.

Once you have found the market you want to trade you can place orders using the orders box. Here you can select what price you want to buy or sell the asset at, what order type you want to use, and how much of the asset you want to buy or sell.

Trading Terminal on FTX

Once you have placed an order it will appear in your open orders tab at the bottom. It will give you the details of the order you just placed as well as how much of your order has been filled.

Open Orders Tab

Once your order has been filled in your positions tab it will show you details like profit and loss, estimated liquidation price, and the notional size of your order.

FTX Open Positions Tab

One thing to keep in mind which might be different from previous trading platforms is that FTX only supports cross leverage. Cross leverage is contrasted against isolated leverage. Isolated leverage is what most people are use to and is the easier to understand. With isolated leverage if you get liquidated on a trade you will only lose the amount you put into that trade. So if you bought 10000$ worth of Bitcoin with 10x leverage you have put up 1000$ in margin. If Bitcoin falls 10% your position will be automatically liquidated and you will lose your 1000$.

However with cross leverage the assets of your whole account are used as margin. This typically means that you are less likely to get liquidated but when you do get liquidated assets in your wallet will be liquidated as well.

If you want to use isolated leverage on FTX there is a work around by creating a sub-account. Simply create a sub-account then transfer the maximum you want to risk into the sub-account from your main account. If you get liquidated in this case only your sub-account’s assets will be liquidated and the assets in your main account will remain untouched.

FTX Sub-account Menu

User Interface

Perhaps my largest albeit a relatively minor issue with FTX is its UX. From the home page there is drop down menus, hover menus, all directing you to an infinitude of different things. If I weren’t involved in crypto I wouldn’t even think based on the home page that it was a trading site.

If we compare it to BitMEX when you first login you’re immediately presented with a trading terminal, you can see price charts, trades taking place, markets, your orders and your positions. You immediately know you are in an environment where something to do with trading is taking place.

While when you first login to FTX you’re at minimum 2 clicks away from even getting a glimpse of a trading interface.

User interface is not the greatest concern when signing up for an exchange. FTX is still excellent once you get used to it. However, if FTX worked on crafting a good UI and UX it would make a great exchange even better.

Conclusion

Now that we have assessed FTX on all of our criteria we can finally give out conclusion and final score.

FTX although only starting to make its first trades just over a year ago has made massive leap forwards. In terms of the sheer number of features and markets on offer it is leagues ahead of the competition. No other derivatives exchange offers options trading, leveraged tokens, Quant Zone, prediction markets, a vast array of indices, spot markets, and trading competitions all in one package.

There are slight issues with regulation. Having an oil futures market puts them on the radar of regulators when they don’t necessarily need to be.

In terms of KYC and AML leniency FTX is not the best but it is not the worst either. On the plus side you can begin trading without having to submit any form of documentation. Once you confirm your name and country of residence you can withdraw 2000$ a day which is good. However, in comparison Bitmex, the largest exchange has no withdrawal limits with no identity verification.

KYC on FTX may be due to its spot FIAT markets which allow you to wire money to the exchange, but for some that benefit may not outweigh the drawbacks.

The user interface is also an issue we brought up however this is not exchange breaking issue and is something that FTX can fix in future iterations.

To conclude, we posed two questions at the start of our review. Is FTX the best up and coming exchange? And is it worth signing up for? To answer simply the answer to both questions is yes.

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