It didn’t take long for the crypto exchange FTX to become one of the leaders in the sector. Created in 2019 by billionaire genius Sam Bankman-Fried, the platform stands out with a very diverse offer and many original derivatives designed to attract all audiences, from experienced traders to novices of the cryptosphere.
Thus, FTX users are spoilt for choice. They can trade in the traditional spot markets as well as implement advanced short or long strategies, with or without leverage, thanks to options and futures contracts, some of which are even based on real-world news.
Spot markets
They are the classic entry point to cryptos. New investors are bound to make their first purchases using this simple way of interacting with the digital asset market.
FTX offers a number of pairs for them to buy all the major crypto-currencies. Users of the exchange can trade cryptos against a FIAT currency they would have deposited in their account, BTC, ETH, FTT (the platform’s native token), and all sorts of stable assets such as Tether (USDT), USDC etc… The list is long, the offer is plethoric.
Futures contracts
FTX’s perpetual futures contracts, also known as “futures”, allow traders to protect themselves from the volatility of an asset’s price, while still having the flexibility of timing. These contracts do not trade the asset itself, but rather are bets on the evolution of its price.
In effect, the seller and buyer agree to buy or sell this “future” security at a price set in advance, without the contract having an expiration date. FTX offers perpetual futures contracts on more than 20 cryptocurrencies such as Bitcoin (BTC), Binance Coin (BNB), Chainlink (LINK), etc…
Users of the exchange can also easily diversify their portfolio and thus reduce the risk inherent in a single exposure. There are indeed perpetual futures contracts with a basket of crypto-currencies as an underlying rather than a single one.
The price is calculated on the basis of the weighted average price of the crypto-currencies that make up the contract. They are divided into 3 main indices:
- The ALT-PERP index is made up of a dozen major altcoins with large market capitalizations.
- The MID PERP index is made up of more than 20 cryptos with medium market capitalizations
- The SHIT-PERP index simultaneously exposes the trader to about fifty cryptos with low market cap, greater potential, but also greater risk…
FTX also offers thematic approaches basing for example these indexes on exchange tokens (BNB, FTX Token (FTT) …), on anonymous tokens (Monero (XMR), Zcash (ZEC) …) or on regional baskets composed for example of major Chinese cryptos like QTUM and NEO.
FTX leveraged tokens
Leverage allows an investor to bet more than their actual funds and therefore expect gains that they would normally only get with a much larger sum.
In the case of FTX, the desired factor is built into the tokens through the smart contract from which they are derived. They allow traders to benefit from leverage without having to deal with the constraints associated with traditional position taking, i.e. collateral management, margin etc…
Traders can choose between 45 different leverage tokens offered by FTX, depending on their trading strategies and risk sensitivity.
These tokens can be divided into 2 categories and 2 sub-categories:
- Upwards: BULL (x3) or HALF (x0.5)
- On the downside: BEAR (x-3) or HEDGE (x-1).
It should be noted, however, that FTX leveraged tokens can lose significant value quickly, and are generally not intended to be held for the long term. It’s important to understand the mechanics before exposing yourself to real and significant financial risk, because while you can multiply your gains, so can your losses.
MOVE contracts
These are another type of derivative (understand “backed by an underlying asset”), futures contracts that allow traders to generate profits by betting on the price movements of a cryptocurrency, including the stability of its price, over a given period.
In practical terms, this means anticipating the volatility of an asset rather than estimating the direction of movement or a target price. The contract can expire on a daily, weekly or monthly basis, and it can also be subject to significant leverage effects, interesting if you master the tool, risky if not.
For example, a long MOVE contract on Bitcoin allows the investor to earn $1,000 if the price of BTC has risen or fallen by $1,000 between the contract’s launch date and its expiration date.
A short MOVE contract on Bitcoin, on the other hand, allows the trader to generate a gain if the price of BTC has remained relatively stable between the contract’s launch date and its expiration date. A high potential trading product that again requires a clear understanding of its principles before trying it.
Options
These assets offer traders the same benefits as futures contracts in terms of hedging against volatility risks, with the added bonus of increased flexibility.
The FTX platform offers peace of mind when investing and generating profit with some exclusive trading tools
Traders who open option positions purchase a “right to buy” or “right to sell” an underlying asset at a predetermined date and price, but without obligation.
Traders can customize FTX options in a variety of ways, setting their strike prices and expiration dates according to their trading strategy preferences and risk management.
Among other original features of FTX outside the field of cryptos, there are derivative markets that allow to position oneself on the rise or fall of various current events such as elections or even recently on the holding or not of the 2021 Olympic Games in Tokyo. This is further proof, if any were needed, of an innovative and playful approach to finance, which has contributed to its meteoric rise.
Today, FTX is one of the top 5 derivative exchanges in terms of volume. It enjoys the support of major players such as crypto liquidity provider Alameda Research, and Binance, which invested tens of millions of dollars in the exchange in 2019, was not wrong. An adventure that seems never to slow down since FTX announced in June 2021 the upcoming launch of its NFT platform. One more string to their bow, and a new good reason to make their discovery.
