The FTX token is an exchange token created by the FTX Exchange with the ticker FTT to power its ecosystem and provide value inside the exchange’s activities.
The exchange was founded in an attempt to avoid clawbacks in cryptocurrency exchanges.
This is accomplished through a three-tier liquidation strategy that utilises rate-limited orders to close positions and a customer loss insurance fund. It accomplishes this in part by pooling collateral across all tokens in a single universal stable coin wallet. This idea is based on how typical futures markets work. Traders can also use it to open short trades or leverage their money without utilising margin or futures.
What is the FTX Token FTT?
The FTT coin was established with the FTX Exchange in mind. It is an ERC-20 token that serves as the lynchpin of the exchange’s ecosystem, with a variety of impressive uses inside the exchange’s operations. It is just like Binance’s BNB token and Huobi’s HT token and since exchange tokens, in general, have fared well over the years, this has sparked a lot of interest in FTT from investors.
FTT Token Utility
The utility of an exchange token, or the use cases it fulfils, is what determines its underlying value. To raise its value, a token must have limited availability. With that in mind, let’s look at the token utility of FTT and how its supply has been controlled.
- Discounted Trading Fees – A common expectation for any exchange token is that it will provide discounted trading fees to individuals who have it. Of course, FTT meets these expectations, and traders are encouraged to buy FTT tokens in order to lower their trading expenses. Depending on the quantity of FTT held, trading fees are reduced by three per cent to 60%.
- Socialised Gains – One approach for an exchange to avoid clawbacks is to finance an insurance account that protects traders in the case of extreme market volatility. FTX has gone even farther by implementing a rule that any FTT holders at the time will receive a bonus payment from the surplus insurance funds if their insurance fund shows a big increase. If we get another extended bull market in cryptocurrencies, this may turn FTT into a dividend-paying company.
- Token Burns — one way that FTX manipulates supply to raise the price of FTT is through token burns. FTX buys back FTT tokens and burns them, or destroys them, with one-third of the fees collected by the exchange. FTX has stated that they will continue to do so until 50% of all FTT generated has been burned.
- OTC Rebates-Trading volumes in excess of $500 million have been reported. FTX is one of the world’s major cryptocurrency exchanges, but owing to a relationship with Alameda Research, they can also provide an over-the-counter (OTC) trading platform. High-volume investors and traders who don’t want their trades to affect market prices generally use this platform. According to the FTT Whitepaper, if these OTC traders possess enough FTT, they will earn a rebate.
- Future Plans — FTX has announced that they intend to develop a spot trading platform in the future. However, no specific timetable has been set. They also stated that this spot trading platform might evolve to an IEO platform similar to Binance Launchpad. Given that FTT would very probably be utilised for purchases on such a platform, demand for FTT should increase once it is established.
How many FTX token (FTT) coins are there in circulation?
FTX is a cryptocurrency derivatives exchange that specialises in institutional-grade solutions such as futures, leveraged tokens, and OTC trading and it is currently pegged at $61.57 dollars at the time of writing this according to CoinGecko. The FTX Token serves as the foundation of the FTX ecosystem, which was created to maximise network effects and demand for FTT while reducing its circulating supply. As of February 2021, it has a circulating supply of roughly 94 million tokens and a total supply of around 345 million.
Is FTX token a good investment?
FTX has swiftly become one of the world’s most popular cryptocurrency trading platforms. And it has a lot of utility in the FTX ecosystem, and that this utility should keep the token in high demand. A benefit of the FTT token is that, because of its socialised profits concept, it might become a passive income source. If those socialised gains become a reality, there could be a huge demand for FTT in the future.
But as the crypto financial experts will always say when this type question is being presented to them, they will always reply with ‘DYOR’ which means ‘Do Your Own Research’. Do Your Own Research (DYOR) is a popular slogan among cryptocurrency aficionados. The acronym, on the other hand, isn’t specific to the cryptocurrency world only and it’s often utilised on the internet because of how quickly and readily misinformation can spread.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.