FTT is the exchange token of FTX, a cryptocurrency derivatives exchange launched in 2019 with the help of Alameda Research. In this review, I’ll be taking a look at the FTT token, highlighting what it is, what utility it provides and whether or not it could be a good investment within the cryptocurrency industry.
What is FTT?
FTT is an ERC20 token created for the FTX cryptocurrency exchange. The token is the backbone of the FTX.com ecosystem and boasts impressive utility within the exchange’s operations.
FTT could be compared to the likes of other exchange tokens like BNB (Binance Coin) and therefore many are interested in investing in such tokens as they have proven to show some nice market movements over the years.
FTT Token: Key Facts
Creation date: 21 April 2019
Contract Address: 0x50d1c9771902476076ecfc8b2a83ad6b9355a4c9
Total Supply: 348,069,291 FTT
The value of many cryptocurrencies comes from something called ‘token utility‘ – essentially, this is the use cases of the token which provides market demand, and thus value. In addition to this, for a token to have a market value, it usually has to have a limited supply (maximum amount available). With this in mind, let’s take a look at FTT’s token utility:
FTT has 7 main areas of utility within the FTX exchange ecosystem, these are as follows and are ordered by level of importance in my personal opinion.
Discounted Trading Fees
By holding FTT tokens, users of the FTX exchange can receive discounted trading fees based on a tiered structure. This incentives users to purchase FTT tokens to reduce the amount of trading fees they pay on the exchange and thus, increases the demand of the FTT token. To see the tiered fee discount structure for holding FTT, go to ftx.com/ftt.
Many crypto exchanges which offer leverage like FTX, Bybit & BitMEX usually have an insurance fund which, in case of large market volatility, protects traders funds. FTX.com have taken this one step further by stating that, in the case of a large increase in the insurance fund, FTT holders will receive a pro-rata bonus on their FTT holdings from the insurance fund. In my opinion, this is a great way of incentivising the purchase of FTT since you may be able to receive a form of passive income (similar to stock dividends) with the FTT token. Thus, this could mean that an investment in FTT may be profitable.
This utility feature of the FTT token somewhat overlaps the idea of token supply which I mentioned above. Simply put, one-third of all the fees generated on the FTX exchange are used to buy FTT tokens and are then burned – meaning that they no longer exist on the blockchain. This will be done until a total of 50% of the FTT tokens are destroyed. In essence, this decreases the supply of the asset and therefore could increase the price if demand increases in a simultaneous period.
White Label Solutions
White labels are a way of generating more revenue for companies by selling on the framework of their product which can be modified and used elsewhere by other companies. This seems to be popular with crypto exchanges since they can sell a copy of their exchange software and the new company will add their own design to it and make a completely new business, without the hiccups you may experience starting from scratch. Anyway, FTX has stated that they have seen a large amount of interest in a white label solution of the FTX futures and OTC exchange by several parties. Now you may be wondering how this affects the FTT token. Well, FTT will be one of the payment methods available to purchase these white label solutions and it wouldn’t surprise me if FTX offers a discount to companies that use FTT to purchase a white label. Depending on the popularity of this product, the demand for FTT could increase drastically considering the fact that white labels aren’t usually that cheap.
IEOs (Initial Exchange Offerings)
After their partnership with Binance, it seems like FTX.com will be offering a spot exchange which hosts IEOs, a new fundraising method for crypto companies first seen on Binance in 2017 with the Binance Launchpad. This IEOs typically offer a token sale in a short period of time and are usually fairly hyped up prior to launch. The FTT token will be used for these IEOs in the future, and this may mean that we see a large increase in demand for the FTT token and is something worth considering when thinking about an investment in FTT.
As one of the largest crypto exchanges in the world, it comes as no surprise that FTX.com also offers an OTC (Over-the-counter) trading platform. The majority of the time, this is used by high-volume traders and those who wish to not affect the market with their buys/sells. According to the FTT Whitepaper, OTC traders who hold FTT receive rebates on their OTC trading on FTX. In addition to this, FTX will also repurchase and burn FTT depending on the revenue generated from this section of the exchange.
Traders on the FTX exchange can also use FTT as the collateral for their positions on the trading platform hence increasing the demand for the token, although how much of an increase is unclear since there is no incentive to use FTT as collateral rather than other standard assets such as Bitcoin (BTC) or Ethereum (ETH).
So, is FTT a good investment?
Legally, I’m not allowed to tell you whether or not FTT is a good investment or not, but I can offer you my personal opinion in both a subjective and objective manner.
FTX is growing into one of the most popular cryptocurrency exchanges in the world and their token; FTT, has many areas of utility within the ecosystem which provide it with demand and thus, the potential value within the market.
The main risks involved with an investment in FTT lie with the state and interest of the crypto market in general and the legitimacy of the exchange. Both these risks aren’t extremely worrying to me since the team behind the FTX exchange appear to be transparent and well-natured – I think that they genuinely want to create the largest, most efficient exchange within the cryptocurrency industry.
The most powerful, and important aspect which makes me interested in buying FTT is the idea of socialised gains which gives the FTT token a passive income aspect unseen with many other cryptocurrencies.
Now, you’re probably wondering where you can get your hands on some FTT and where you an store it if you decide to buy some, if so, keep reading.
Where to buy FTT
The FTT exchange token is available for purchase on the public market and can be traded with decent liquidity on a number of exchanges. Since FTT is an ERC20 token, you’ll need some Bitcoin or Ethereum before you can buy it on the following exchanges. I personally recommend Coinbase as a gateway to get your normal money into crypto. Once you’ve got either of those cryptos, use the following exchanges to buy FTT.
Be aware of anyone offering you FTT on Telegram or other social media channels, they may have malicious intent – buying from an exchange is usually safer.
Storing Your Tokens: Best FTT Wallets
As an ERC20 token, you can store FTT on any ERC20 compatible wallet as well as the exchanges which have listed the token. Here are the most secure FTT wallets in my opinion: