FTX is a cryptocurrency derivatives exchange powered by Alameda Research, a quantitative trading company and crypto liquidity provider.
The exchange launched in April 2019 and offered the usual spot trading, inverse swaps and futures contracts found on other major platforms. In early 2020, the exchange launched its daily and weekly BTC binary options markets.
FTT / USDT daily chart. Source: TradingView
FTT is the exchange’s native token and is issued on the Ethereum blockchain. FTT stakers receive a trading fee discount based on a tiered system. Other benefits include bonus votes in their polls and increased airdrop rewards.
The first airdrop occurred in August 2020 when 500 million serum (SRM) tokens were distributed to FTT holders. To stand out from the competition, users’ collateral is shared in a universal stablecoin wallet.
This means that traders can drastically reduce their margin requirements. Numerous leveraged tokens that mimick leveraged ETF stocks were also listed, including 3x Long Bitcoin and 3x Short Litecoin.
Leveraged tokens are derived from the exchange’s perpetual swap contracts and function as tradable ERC-20 tokens that can be withdrawn and traded. These innovative products have made the FTX a popular exchange among investors, which is reflected in the rise in open futures contracts.
Global markets aggregate open interest. Source: coinalyze.net
As shown above, the number has grown 340% in the past six months, surpassing the $ 2 billion mark to significantly outperform more established exchanges.
In November 2020, the exchange ventured into tokenized stock trading, but it was not available to its US citizens. His partner CM-Equity holds the tokens that are redeemable for the underlying shares. Interestingly, users can buy less than one stock, which is especially useful for high-priced stocks like Amazon ($ AMZN) and Google ($ toget).
In December, FTX continued its innovations and launched pre-IPO futures contracts for AirBNB and Coinbase. These contracts allow traders to speculate about what price these companies will list on an exchange. The exchange also offers trading in themed products, including a basket of listed cannabis stocks.
By creating multiple markets with sufficient liquidity due to the market-making structure, the exchange was able to attract the attention of a new customer base. More recently, a Wall Street Bets index has been introduced that includes GameStop ($ GME), Dogecoin (DOGE), and iShares Silver Trust ($ SLV).
Thanks to these popular offers, the price of FTX Tokens (FTT) has doubled since early 2021.
FTX Token (FTT) Token price at Binance. Source: TradingView
To create further incentives for holding the token, FTX is buying back and burning 33% of all fees generated on the exchange and 10% of net additions to its insurance funds. This process will continue until half of the original 350 million shipments are destroyed.
While this may seem like a deflationary schedule, the team will be allocated 31.25 million tokens, which is at least 17.8% of the targeted circulating supply of 175 million. Regardless of the current token price of $ 11.70, once the burn is complete, the market cap will exceed $ 2 billion.
According to Messari, this number corresponds to a discount of 45% on the market capitalization forecast by Binance Coin (BNB) for 2031. Dollar.
Interestingly, Binance has an undisclosed investment in FTX, which may create less incentive for direct competition.
For now, it appears that the market is rating both tokens with the same rating. Binance appears to be expanding its ecosystem through the decentralized exchange of Binance Smart Chain, the incubator for blockchain projects and a successful token launchpad platform.
FTX, on the other hand, is focused on leading the innovation in derivatives.
Currently, all of these projects offer added value for token holders. Given the burning schedule and increasing popularity on futures exchanges, it is possible that FTT will continue to see further price increases.
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