FTT Coin: A Crypto Powering a Multi-Billion Dollar Exchange
FTX is one of the most popular cryptocurrency exchanges around thanks to its sophisticated options for advanced crypto traders, and the value of its native token soared sky-high in 2021. Although 2022 got off to a shaky start, many believe it wasn’t the end of the road. Let’s break down what makes FTT coin and the FTX exchange special.
After a stunning nine months at the start of 2021, FTT coin soared to over $60—that’s a 1,000% increase from its price at the beginning of the year. Although its value has since fallen, it remains well above where it was in early 2021. So, is the bull run over? Or is FTT coin just biding its time and riding out the storm before it surges again?
To pull together an answer to that question, you’ll need a full understanding of the coin. We’ll dive into the history of the FTT coin price, what makes the crypto special, and the role of the FTX exchange.
FTT coin review
FTX is a popular crypto trading platform, launched to specialize in derivatives after the founding team encountered problems with other futures exchanges. Its founder is Sam Bankman-Fried, who is something of a superstar in the crypto world—he’s also behind Alameda Research, a leading crypto trading company and liquidity provider.
We’ll dive further into the details of the FTX exchange shortly; for now, you just need to know that FTT coin is its native token.
What is FTT coin used for?
Essentially, the role of FTT coin is similar to the role of BNB on Binance. It offers all kinds of benefits for tokenholders when they’re navigating the FTX exchange.
First of all, you may be able to access discounts.
Tokenholders have lower trading fees on the exchange—depending on how much FTT you own, you could save up to 60% on trading fees (although this requires a holding of $5 million, so it’s not exactly realistic for the average trader), which can help you save and reach your goal to turn $1000 into $5000 faster.
FTX also has an over-the-counter (OTC) trading platform, which is mostly used by high-volume traders. Tokenholders can receive a rebate of up to 0.02% when using this platform if they have enough FTT.
In the future, there may be the potential for even more savings. FTX hopes to provide its services to other businesses as a white label solution (selling its services through another company using a different name). In this case, FTT coin would be a payment option, and its tokenholders would receive a discount.
But these aren’t the only benefits. FTT can also be used as collateral on FTX or for staking and earn interest on crypto.
Plus, the insurance fund on FTX exchange (more on this shortly) gives out bonuses to FTT tokenholders when it reaches a certain level. You can think of it as being a similar mechanism to the dividends stockholders receive when a share does particularly well.
How to buy FTT coin
Considering that FTX is a major exchange and its native coin is in the top 50 for market capitalization, you’d think that FTT coin would be widely available. However, there’s one major complication.
US residents can’t trade FTT tokens, so if that’s where you’re located, tough luck. Although you might be able to get away with buying them on a decentralized exchange, it’s best avoided since you could run into trouble.
If you live elsewhere in the world, you can buy FTT coin on Binance vs Kraken and KuCoin, (among others). Although Binance initially delisted FTT in March 2020, it’s since reversed this move. However, you still can’t buy it on Coinbase.
FTT crypto price history
When it was launched in 2019, the FTT coin price was $1.8. Its price steadily climbed over the next year or so, surpassing the $5 mark by the end of 2020. But it was in 2021 that its value really began to climb.
At the start of 2021, FTT coin was worth $5.8; during the crypto market boom in May, it rose to $61—this is the 1000% increase we mentioned earlier. When the rest of the crypto market declined that summer, FTX followed, reaching a low point of $24.5 in June 2021. However, this didn’t last.
FTX enjoyed a second spike in late 2021 and reached a value of $79.87, which represented a 1277% increase from its price at the start of the year. Again, it wouldn’t last, and the price dipped down to below the $40 mark in early 2022.
It’s recently been rising again, with some moderate increases in February—but will it a hot investment trend? That partly depends on how optimistic you are about the future of the FTX exchange.
What is the FTX Exchange?
As touched on already, the FTX exchange is a platform for trading crypto derivatives, meaning it fills a gap in the market that other popular exchanges like Binance and Coinbase couldn’t satisfy. It also offers various other sophisticated services, including maintenance margin, product listing, collateral, and liquidation processes.
Everything is built with professional traders in mind rather than beginners.
FTX recently received a valuation of $25 billion, which we can all agree is pretty impressive. Plus, it will soon acquire LedgerX, a derivatives company licensed to trade in the US.
Let’s look at some of its standout features.
One of the key innovations of FTX is its leveraged tokens. These allow traders to make leveraged positions without actually trading on margins—that might sound contradictory, but hear us out. Instead of margins and futures, traders can use special tokens that represent different amounts of leverage. These are available for most major cryptocurrencies, including ethereum, bitcoin, ripple, and EOS.
Another important feature is clawback prevention. A common problem among crypto exchanges with derivatives trading has been that exchanges can claim customer funds when they’re low on liquidity. This doesn’t happen in traditional exchanges as the institution typically has enough liquidity to handle the situation independently.
To avoid clawbacks, FTX uses a three-tiered liquidation model involving three steps:
- Rate-limited liquidation orders to close positions.
- Unique backstop liquidity provider program.
- Insurance fund.
FTX also has a centralized collateral pool. Instead of collateral being fragmented across token wallets, which increases the risk of positions being liquidated, there’s a centralized pool.
Finally, there’s a universal stablecoin wallet. Because stablecoins can be used to settle derivatives trading, a single wallet can be used for all transactions.
If you’re thinking this all sounds rather complex, you’re not the only one. FTX has received criticism for being too complicated for the average trader, especially when it comes to the leveraged tokens. But there’s clearly a market for it, so fair play to FTX and everyone experienced enough to use it.
In case you’re looking for other cryptos to invest, you might be interested in safemoon price prediction to know to make your own mind up.
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