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FTX expanding faster than other exchanges

Updated: Aug 31, 2024
Published: Apr 23, 2020
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Out of the currently present crypto-derivative exchanges, FTX is the fastest to go to market with new innovative products. In the past 48 hours alone they had launched two separate products.

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Hash Rate Futures

On May 15th 2020, FTX took the first Bitcoin Hash Rate futures live. These contracts will settle at expiration to the average BTC mining difficulty over a period of time. These contracts have a quarter in length (3 months) and the first expiry will be at the end of Q3 2020. These will become a good method for BTC miners to hedge their risk and yet another financial product for speculators to speculate.

Oil Futures

As the WTI Crude futures (front-month) crashed into negative territory in a first-ever event, many crypto-speculators wondered how they could get their hands on this and trade it. FTX was quick to respond and launched oil futures trading on their platform within a very short period of time.

The contracts derive data from the U.S Energy Information Administration and have an added $100 premium to them to avoid prices entering negative territory. With that being said, if WTI Crude was to trade below -$100 then the FTX Oil contract could theoretically expire negative.

The premium raised questions because a $5 movement on a $10 oil price is a +50% gain but a mere +4.5% with the $100 premium added. Additionally, these contracts are banned for traders in many jurisdictions, one of which is the US.

BVOL & iBVOL

Cryptocurrency traders now have the ability top diversify their strategies by including volatility tokens that track Bitcoin’s volatility via FTX’s MOVE contracts.

These are designed as ERC-20 tokens one which is positively correlated (BVOL) and one that is negatively correlated with the volatility (iBVOL).

This will allow traders to bet on Bitcoin’s volatility going up or down via ERC-20 tokens with 1x leverage instead of trading futures contracts.

Having these different tokens can be beneficial to future decentralised exchanges shall they become mainstream and overtake centralised ones.

US Regulations

Crypto-derivatives have been difficult to access for US residents as most are banned in the country. FTX, a leading derivatives exchange in this space, has recently launched a beta version for its FTX.US operation. It is worth noting that all information is only a draft for the time being.

The new business, registered as “West Realm Shires Services Inc.”, is generally regulated on both the state and federal levels. Additionally, the platform complies with the BSA (Bank Secrecy Act) requirements.

KYC & Limits

The KYC on the US platform is slightly different as in Fiat limitations exist even after declaring proof of address and identity. The only way to access unlimited fiat deposits/withdrawals is through the declaration of the Social Security Number (SSN) for US individuals.

Margin

In addition to the opening of spot markets, FTX.US will also include margin trading with up to 10x leverage given that a user is qualified. While FTX is known as a crypto-derivatives exchange, laws are prohibitive of these products for retail investors in the US and hence the only possibility is spot margin trading which incurs higher fees than futures contracts.

Another exchange that currently allows spot margin trading in the US is Kraken, however leverage is limited at 5x and the list of assets available to trade is limited. Hence, FTX.US’ arrival to the country will bring forward more options residents.

DeFi Boom

During the recent DeFi boom in June 2020, where most of these tokens are running parabolically and increasing at record speeds on listings, FTX has been the fastest exchange to list them alongside their respective derivatives. When Compound's token hit the market it was only available on Poloniex and FTX. The latter had listed June/September futures as well as a perpetual swap for it.

Yesterday, Balancer (BAL) was released to the public markets for the first time and FTX has already listed it for both its spot and futures market.

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