FTX Exchange Review – The Best Exchange for Derivatives?

FTX exchange is famed as one of the leading crypto exchanges in the derivatives and futures trading sphere. FTX is committed to continuous improvements of the already impeccable services they render to traders. 

It crowns this with very affordable trading fees and lots of new and innovative financial products and services from which crypto traders could make choices. 

On July 28, 2021, Blockfolio became part of the FTX brand, and as such, the former is now known as FTX too. Continue reading this comprehensive FTX review to get a full scope of how the exchange works, including its features, fees structure, pros, and cons. 

At a Quick Glance

Key Findings

FTX adds responsive customer support and low trading fees to its wide range of trading products. A professional user interface that makes trading seamless only means we rate FTX pretty high. FTX is simply a platform built by traders for traders.

What is FTX Exchange?

FTX is a crypto derivatives exchange built by and designed for traders. The FTX Exchange offers a robust platform for beginners, traders at the intermediate level, and professional trading firms. Traders who use FTX exchanges get access to modern path-breaking and fresh trading markets. 

On FTX, you get access to options, derivatives, leveraged tokens, and volatility products. Its management team comprises renowned liquidity provider and CEO of Alameda Research, Sam Bankman-Fried. Links with Alameda gives FTX access to unrivaled order books, with Alameda managing more than $100 million worth of its digital assets. 

The FFT Token

The FTT token is FTX’s native cryptocurrency which gives holders some beneficial and juicy entitlements. Holders of FTT enjoy lower trading fees than others, gain from the platform’s insurance fund and fees generated by burning and buying weekly on FTX. What’s more, holders of FTT can also use the token as collateral for their futures trading.

Range of Offering

Although FTX is an emerging cryptocurrency derivative trading platform, the rate at which it has been reeling in users is impressive. Its range of offerings, which covers some beneficial and advanced products, is crucial to its rising patronage. 

What’s more, FTX has a reputation for launching some new and innovative trading products, putting it in a league of its own. Here are some important features and products that FTX offers that sets it apart:

1. MOVE Contracts

MOVE contracts allow traders to base their trade on the price movement of a cryptocurrency. They do this by risking a part of their funds, and the expected movement could be in either direction.

In other words, these contracts allow traders to trade market volatility, and the direction of the trade is insignificant in the transaction. What is important is the total dollar amount moving to any of the directions. Move contracts on FTX are great for fundamental traders and beginners who want to trade future volatility.

2. Spot Markets

Spot markets on FTX enable users to buy crypto and trade them using market-matched orders as well as traditional techniques. Popular digital assets like USDT, BTC, ETH, FTT, BNB, BTMX, BCH, and TRYB are available on FTX for spot trading.

3. Prediction Markets

Prediction markets like the name suggest allow users to trade like they are betting on a real-world event. It means that you can either win and settle the contract at 100% or lose and have it drop to 0%.

4. Futures

Futures is an agreement that involves the buying or selling of an asset but at a price set beforehand. This market supports perpetual futures on 20 or more cryptocurrencies, including BNB, BTC, and LINK.

Index futures is a variant that allows users to trade multiple segments of the cryptocurrency market easily. Users can trade exchange tokens, regional baskets, privacy tokens, small-cap, mid-cap, and large-cap coins.

5. Options

With options, users can sell an underlying asset at a price and date set beforehand. However, this condition is not mandatory as you can choose a right to buy or right to sell option when you open an options contract. What’s more, users can also trade short or long with leverage and set their expiration time and strike price too.

6. Leveraged Tokens

These are financial instruments and ERC20 assets that you can find on the FTX exchange. They reflect real-world prices of the underlying coin or token.

A good illustration is BULLUSD, a 3x long BTC that increases in value by 3% with every 1% rise in BTC and vice-versa. At the moment, there are four types of leveraged tokens that FTX has available: BULL is 3x, BEAR is -3x, HEDGE is -1x, and HALF is +0.50x.

Commission and Fee Structure

FTX exchange has unarguably one of the best fees globally compared to some of its competitors. However, the platform doesn’t charge withdrawal or deposit fees when users perform crypto transactions with their digital wallets. 

Although if deposits or withdrawals exceed a user’s trading volume, FTX can charge them a fee of up to 0.10% after notifying them. But in the case of fiat withdrawals, amounts below $10,000 will carry a cost of $75 only.

While FTX doesn’t charge deposit or withdrawal fees on crypto transactions via digital wallets, it charges other trading fees. Here’s a rundown of some trading fees and transactions FTX charges:

Spot Trades

FTX charges fees on spot trades, and it deducts these fees from the assets users receive. Placing a buy order on BTC/USD will mean you will be charged spot trading fees in BTC. So if you place a sell order, expect the charges to be in USD.

Takers Fee

Like other platforms, FTX offers a standard taker fee. For all spot and futures markets on the exchange, the takers’ fee is 0.07%.

Makers Fee

FTX also charges Makers fee in trades on the exchange. At present, the makers’ fee is around 0.02% for every future and spot market on FTX. 

Leverage Fees

When a user gets leverage of 50x, your trading fee will increase by 0.02%. So leverage of 100x will increase the trading fee by 0.03%. FTX makes sure these extra fees get paid to the insurance trading fund. But if you’re leveraging ETH and BTC perpetual contracts, this fee isn’t applicable.

Leverage Tokens

For leverage tokens, it costs 0.10% to both create and redeem. Also, users will pay FTX a daily management fee of 0.03%.

Move Contracts

Fees in this regard depend on the asset’s price for MOVE contracts and fees relating to them on FTX.

Perpetual Contracts

FTX charges funding fees on perpetual contracts, but it doesn’t keep the funds. Instead, it pays these funding fees to opposing holders in the contract.

Discount For FTT Holders

Users who hold FTX’s coin (FTT) receive significant discounts on their trading fees in addition to a few other perks they enjoy. However, this reduction may well depend on the amount of FTT they hold.

Futures Settlement

FTX exchange doesn’t charge additional fees for their futures settlement.

Ease of Account Opening

Creating an account on FTX is pretty straightforward. Users will have to complete a registration process before they can set up a derivatives trading login. 

Once you set up your account, you can begin trading on FTX. With email verification alone, users can also withdraw up to $2,000.

KYC Verification

As any well-meaning exchange, FTX takes many measures to ensure solid security on the platform. KYC verification is one way it does this. KYC or Know Your Customer verification helps the platform verify the identity of users and traders in compliance with legal requirements.

On FTX exchange, tier 2 and tier 3 account holders get to directly withdraw cryptocurrency to hardware wallets in unlimited amounts if they complete their KYC verification. They can also withdraw fiat directly through wire transfer to their bank account. Here’s a rundown of the KYC requirements and withdrawal limits of tiers 0, 1, 2, 3 account holders.

Tier 0

• KYC requirement: Email only
• Withdrawal limit: $1,000 USD (lifetime)

Tier 1

• KYC requirement: Email only
• Withdrawal limit: $2,000 USD (daily)

Tier 2

• KYC requirement: User’s full name, date of birth, proof of address, passport/driver’s license, description of the source of assets, picture holding their ID.
• Withdrawal limit: Unlimited cryptocurrency only

Tier 3

• KYC requirement: Bank statement and user’s proof of address
• Withdrawal limit: Unlimited crypto and unlimited fiat

Deposit and Withdrawal

Perhaps the biggest perk to using FTX exchange is that there are no crypto deposits or withdrawal fees. FTX takes care of all withdrawal blockchain fees. Although fiat withdrawals made below $10,000 carry a $75 charge, the rest are free from fees.

One thing to note is that FTX exchange only processes wire transfers on the evenings of weekdays, with Silvergate SEN being the only exception. Besides, you can complete USD wire transfers in one weekday, but non-USD ones could take much longer than that. 

Users can, however, make fiat deposits or withdraw from their FTX wallet and select the fiat currency of their choice. They can also convert different fiat currencies to USD. FTX users can do this by simply clicking the [Convert] button in the FTX wallet.

You can then convert your fiat currency of choice to USD stable coins. The FTX exchange handles every fiat transfer through a third-party OTC desk. But there’s a catch: only holders of tier 3 KYC verified accounts could deal in fiat.

Users who make withdrawals or deposits of fiats for the first time are encouraged to contact the support team before beginning the process. FTX exchange supports a range of fiat deposits and withdrawals in currencies like:

• EUR
• USD
• AUD
• CAD
• GBP
• ZAR
• HKD
• CHF

In addition to this, you can also withdraw the following cryptocurrencies to your FTX exchange account:

• Ethereum (ETH)
• Bitcoin (BTC)
• Binance Coin (BNB)
• Bitcoin Cash (BCH)
• BiLira (TRYB) 
• BitMax Token (BTMX)
• FTX Token (FTT)
• Litecoin (LTC)
• USD Stablecoins like USDC, USDT, PAX, BUSD, HUSD, and TUSD

User Interface and Trading Experience

FTX’s user interface is one of its great features. The team at FTX has built an exchange that traders of all levels can easily use and adapt to right from the homepage. There are some cool features, like switching between dark/black mode to light mode. Users even get to customize the trading interface in several ways.

You can drag and move boxes or rearrange order entry forms and order books as well. To access this feature, simply click on the settings button at the right-hand corner of trading pages.

You can get most of the information you need to know about FTX and the services or products they offer straight from the homepage without even having to sign up. There are comprehensive user manuals, tutorials, and articles on how to use FTX as well. 

Mobile Application

If FTX’s web platform isn’t too mobile for you or you need more trading flexibility, you can easily switch to the mobile app. The exchange launched the FTX mobile application in May 2020. It comes with an equally comprehensive set of trading features and tools, along with an excellent UI/UX design. 

FTX mobile application is available on Google Playstore and Apple Store for Android and iPhone users. The new and updated FTX apps are cleaner and much faster than their previous versions.

Supported Cryptocurrency

FTX supports the trading, deposits, and withdrawals of an excellent range of digital assets. The exchange supports more than 20 perpetual swaps. Futures trading is available for coins like:

• ALGO
• TOMO
• BNB
• BTC
• ETH
• LTC
• LINK
• EOS
• XRP
• MATIC
• ADA
• HT
• MATIC, BTMX, OKB, PAXG, DOGE, XTZ, XAUT. 

In addition to this, FTX also has more than 45 leveraged tokens, which include:

• BULL/USD (3x long BTC)
• BEAR/USD (3x short BTC)
• ETHBULL/USD (3x long ETH)
• ETHBEAR/USD (3x short ETH)
• LTCBULL/USD (3x long LTC)
• LINKBULL/USDT (3x long LINK)
• BNBBEAR/USDT (3x short BNB)
• LEOBULL/USD (3x long LEO)

Users can also perform Bitcoin options trading and BTC MOVE contracts on FTX. However, the spot market is the place to go if you’re after a more direct trading experience. Spot markets currently support digital assets like  BTC, BCH, USDT, XAUT, ETH, BNB, LINK, FTT, TRYB, USDT, PAXG, BTMX, and XAUT.

Educational Tools

The provision of educational tools is one of the several ways FTX supports its users. The resources that the exchange has for new and existing users to grow and learn with are impressive. FTX users can simply visit the FTX help page.

There they will find tons of helpful and well-written articles accompanied by snippets of pages on FTX to work them through any issue they encounter. In addition to this, there are several chat groups in different languages to help users navigate the FTX sites and get acquainted with their wide range of products.

Customer Support On FTX

Customer support on FTX is adequately as extensive as it gets. The exchange makes sure users and traders can reach them via more than one communication channel. In addition, there are comprehensive guides on various features of FTX easily accessible from their website.

A live chat box is always available to handle issues from users who do not understand how to use FTX exchange products and features. What’s more, you can also reach the FTX customer support team via email as well. 

FTX exchange is available on social media platforms like Youtube, Twitter, WeChat, Telegram, and Facebook. These media make it possible and easy for the FTX team to cater to and satisfy its comprehensive user range and FTX community, even in different languages.

Regulation and Security

FTX prioritizes its users’ security above anything and has the resources and best practices to continue providing safety to its investors’ funds. In addition to protecting their safety and information, FTX does the following to protect their user’s finances:

#1. FTX’s Liquidation Engine and Backstop Liquidity Provider System

The FTX security team has a one-of-a-kind liquidation engine. It also has a backstop liquidity provider system that it uses for margin calls with a 3-step solution. This liquidation engine makes use of efficient and sound values to manage not only liquidations but also close positions and escape negative values.

What’s more, FTX warns traders to monitor and close all open positions below or under a 4.5% maintenance margin. What this does is that it minimizes the adverse effects of risk-laden trades and helps prevent clawbacks.

FTX  displays on the information box at the right-hand side of market pages an estimated liquidation price. It allows traders to stay in control.

#2. Strategic and Important Partnerships With Top Platforms

FTX understands the importance of extending its reach and has gone into strategic partnerships with big industry players. Binance is one of the names on the list of partners FTX has.

Blockchain analysis setup, Chainalysis, helps FTX inspect all withdrawals and deposits. The platform also partners with Paxos, Circle, Proof of Capital, and FBG Capital as well.

#3. FTX’s Insurance Fund

The FTX insurance fund is there to prevent customer losses should a sudden and damaging market movement causes swift liquidations of several open positions to happen. FTX traders who use 50x to 100x leverage get to pay higher fees.

These fees are then allocated to the insurance fund by the exchange. FTX uses the insurance fund to pay up users who had open positions that get terminated unfairly at a loss when the liquidation engine doesn’t deal with severe market movements. 

Also, the FTX has set aside 5% of all non-FTX owned FTTs. FTX will use this to pay customers if the insurance fund is unable to do so.

Is FTX Safe?

FTX exchange employs some security features standard with banks to make sure user’s personal information and funds stored on the cryptocurrency exchange are secured. The platform maintains a high level of security in their trading environment using 2FA (two-factor authentication) and cold wallet storage.

Also, the platform hasn’t suffered any malicious attacks or powerful hacks since it began operation in 2019. While this might seem a short time, it is rather impressive and shows how dedicated they are to security.

The team behind FTX’s security doesn’t even let out much on their security protocols. But for starters, they use a full SSL encryption on the FTX website in addition to 2FA via SMS, Google Authenticator, or Authy.

Conclusion

FTX is carving a reputation as one of the few platforms that can comfortably offer functionality and high-level trading features to any community of traders, despite their level. 

Although some of its more essential features might be considered complex, they still have to be applauded for being functional and delivered to traders in an equally helpful user interface.

It is also towing similar paths with Binance in terms of its unique native token, FTT. The FTX team looks forward to the token’s success, just like BNB. 

While its US version and operation have their limits, FTX is finding other ways to climb up the chain as a formidable crypto exchange for derivatives. 

Frequently Asked Questions (FAQs)