FTX — AMA @ The Topic Room

Steven Jim
Sep 14, 2019 · 13 min read
https://ftx.com/

Brief

FTX is a derivatives exchange founded and built by one of crypto’s best trading outfit — Alameda Research. With its creative indices and numerous pairs, FTX is one of the fastest growing exchange in recent times. They have a great competition called Battle Royale that lets you stake FTX tokens to back traders and win when they win.

Q&A

So welcome to the AMA for the FTX team. If you missed them, they are one of the hottest crpto derivatives exchange and they debuted on the moon with amazing price action! Part of that is their reputation as one of the best trader outfit as the people behind Alameda Research and the community of hardcore traders who supported the project. Ftx feels like the punk rock of crypto exchanges. So to kick it off. can you 3 intro yourself. Tell us your role in the company, and your crypto journey.

Sam: Hey all! I started out my career working for Jane Street Capital, trading international ETFs. In 2017 I left and started up Alameda Research, a crypto quant trading firm; and then earlier this year we founded FTX, a crypto derivatives exchange. Outside of crypto I’m excited about philanthropy, games, and trading.

Darren: Hi everyone. I’m Darren head of bd for Alameda Research and CMO of ftx. Before crypto I was a software engineer at silicon valley. Outside of crypto , I enjoy golf and working out with Burg.

Burg: Hey guys, my names Burg, I studied economics with a masters of applied finance. I work with Darren in the business development side of things. I also enjoy games, trading and lifting.

Q: So Sam, tell us about FTX.com — what sparked the idea and what is it exactly?

S: FTX is a crypto exchange — we have prepetual swaps, futures, leveraged tokens, spot markest, OTC, and we’ll have options coming soon!

The idea came mostly out of:

a) frustration with the current crypto derivatives exchanges: huge clawbacks, matching engine issues, annoying collateral, etc.
b) lack of innovation in crypto derivatives: the products haven’t improved much or showed much creativity
c) we had a lot of experience using them and so knew pretty deeply how they worked

Q: What was your go to exchange before you built FTX?

S: a lot of them! I’d split between Huobi, OKEx, BitMEX, Binance, Coinbase, Bitfinex, etc. None of them were perfect — they all had strengths and weaknesses.

Q: What is different about FTX from the others you used?

S: a) cross margin with flexible collateral on futures
b) USD settlement
c) leveraged tokens — leverage without needing margin
d) LOTS of products: not just a BTC perpetual orderbook but also futures on exchange tokens, futures on indexes, options coming very soon, etc.

and we keep getting better; we’ve been adding new products constantly and tweaking the existing ones.

Q: Who are your biggest competitors?

D: Bybit, deribit, binance, bitmex, huobi , okex.

Q: Big fan of the leveraged tokens very creative. Can you explain to the group what that is?

S: yup! basically: take this as an example https://ftx.com/trade/BULL/USD

BULL is a +3x BTC token. so if BTC goes up 5%, BULL goes up 15% and if BTC goes down 5% then BULL goes down 15%. so it’s kind of like a 3x margin position. except that instead of posting collateral, managing risk, worrying about liquidations, etc.

a) leveraged tokens automatically rebalance to avoid liquidations and to reinvest profits.
b) they’re ERC20 tokens so they can be traded anywhere.
c) you can buy/sell them just like spot tokens without needing to deal with leverage.

D: For traders who want higher leverage, We recently released 10x and -10x tokens also known as moon and doom.

Q: So tell us about this Battle Royale, Burg, what is it?

B: Yeah sure. So the idea behind Battle Royale stems from a traditional trading competition but also adds a social e gaming element. As we mentioned before we are all gamers and like a bit of friendly competition.

The way we have done this is to allow users to “trade the traders” in essence supporting them with their FTT (the ftx exchange token). By doing this stakers are able to win prizes and rewards without losing their staked FTT. It consists of 5 one week rounds, one of which is a practice round. After the practice round the knockout series begins util the winners are crowned.

There is a heap of other fun collectibles like merch and badges to show off to your friends and for future contests.

Q: So how does one get knocked out?

B: Sure so in the first elimination round the bottom 50% of traders by ROI in that week will be eliminated.

D: A few more things to mention here is that we have large and small prizes for seasoned and beginner traders.

B: Thats right, we want to make this as fun and accessible for holders and traders large and small.

Q: what happens to the staked ftt if the trader is knocked out?

S: you won’t lose your FTT! it’s staked, not spent :).

Q: so just returned to u?

S: yup.

Q: what happens to the staked ftt if your trader wins?

B: So we generate a staking score based on a few key metrics. The better you are at staking on the winning traders the bigger score. You guys can check out the full list of rules at https://battle-royale.ftx.com/ and of course we are always free to answer any other questionsyou will achieve.

Q: What does the winning trader get?

B: 7000 FTT for the winner of the last week but there is prizes for the top 5 every week.

Q: anyone famous trading in the competition?

D: this is the current leaderboard (sorted by number of stakers)

Q: How do u prevent bots from winning the competition?

D: algo traders are welcomed to join to!

S: it’ll be live trading, so people can’t spam with fake accounts for fake trading.

Q: Considering the fact that you have a lot of futures and tokens listed, do you have any insurance in case of system glitches or hacking incidents like the SAFU type?

S: yup!
1) hot wallet is backed by outside capital
2) we have funds set aside for both leverage insurance fund and hacks

Q: What are the advantages that FTX has? What is special about FTX to attract users?

B: USD settles, leveraged tokens, strong engine :)

Q: Please explain what makes you are not “just-fancy-words” project!

S: 1) we put a TON of work into the project. In just 5 months we’ve rolled out perps, futures, leveraged tokens, OTC, spot markets, and soon options; and we’ve also got mobile apps, more markets, and a bunch of other cool stuff dropping this month :)

Q: How FTX is choosing the pairs. For example, why is TRX/USDT, the most famous pair on Binance not included? Please elaborate on this issue.

B: We have this.

Q: What advantages does FTX have over its competitors?
What benefits do you offer to a trader to trade at your exchanges over others?

D: -most liquid exchange in the space
- innovative products (leveraged tokens, altcoin futures, shitcoin index futures)

Q: Fast transaction speed, high security is what is indispensable for FTX. So how does FTX always keep these factors stable?

S: We’ve parallelized what we can in our matching engine, which allows us an average latencey of < 100ms and a peak of < 200ms even with ~100 markets and deep orderbooks.

Q: Decentralized data is always a sensitive story. What will you do if the cost to attack your project is less than the worth of data you store?
I mean if a party can buy more than 51% of your dataset token and start to attack your database to steal much more worthy information than they spent to buy your tokens, then what is your solution for that case?

B: We are a utility token not a blockchain which can be 51% attacked.

Q: Why did Holders of FTT receive Socialized gains from the insurance fund? Does that mean users will be enrolled in insurance funds?

S: Each week we buy and burn 10% of net insurance fund gains into FTT. https://ftx.com/ftt

Q: How do you secure user info and avoid data breach like Binance?

B: Sydney Opera House nice, we dont trust third party with our data. Everyone works on site.

Q: What are FTX’s transaction speeds and transaction fees? Currently, does FTX have any program to help users reduce transaction fees?

S: yup! https://help.ftx.com/hc/en-us/articles/360024479432-Fees

a) FTT holdings
b) higher volumes

Matching engine latency is < 100ms.

Q: Since most projects are now focusing on developing blockchain application, payment services, Trading of digital asset, derivatives & Future Trading more and more, so what is the most outstanding feature of FTX Platform ? Create a unique competitive position.

D: we aim to be a more liquid, innovative and better designed bitmex/other futures exchanges.

Q: What does your token do?

D: FTT main utility
++ 30% of all generated fees on FTX futures
++ lower trading fees and tighter otc spreads
++ FTT can be used as collateral
++ 5% of fees earned on the plattform
++ 10% insurance fund additions

Q: -Do I need to do my KYC Verification for Using your Ftx exchange?
-How will you Face regulation problems from Governments of Different countries, if you try to launch your project in different countries?

S: you need to do KYC to have substantial withdrawal limits. We’ll also be rolling out a new policy in the next week.

Q: How do you plan and evaluate what coins/tokens you will list on your platform?

B: User demand is a big factor :)

Q: Matching engine latency is < 100ms — How did u achieve this?

S: a) parallelizing what we can
b) spending LOTS on AWS bills :P
c) thinking really hard about exactly what needs to be computed at what speed

Q: How does FTX solve the problems that exchanges are facing: system overload, clawbacks, lack of liquidity, …?

D: https://medium.com/@ftx/our-liquidation-engine-how-we-significantly-reduced-the-likelihood-of-clawbacks-67c1b7d19fdc

2) alameda research is a market maker for FTX. Since Alameda REsearch is one of the largest market makers and liquidity providers in the space, we are able to make FTX extremely liquid

Q: Does the social insurance fund help limit the risk of bankruptcy of investors? Do users need to pay a premium?

S: Yup! There’s an extra trading fee for 50x — 101x leverage that helps to fund the insurance fund.

Q: What is the vision of FTX in the future? Does FTX have any special plans to attract more users today?

D: AMAs. Vision of FTX is to be the dominant derivatives exchange within a year.

Q: How do I know that I won’t face the system overload issues like Bitmex during high volatility period ?

S: we’ll make sure to keep building out our matching engine as we grow to stay ahead of the game; right now our peak latency is < 200ms

Q: Does the social insurance fund help limit the risk of bankruptcy of investors? Do users need to pay a premium?

B: Half of the extra 5bps for high leverage plus 1/3 of the position from the backstop liquidity provider program goes to the insurance fund.

Q: One of the biggest innovations that FTX Exchange is bringing to the crypto markets is leveraged tokens. Can you explain and suggest us few way to use this option?

D: In order to promote mass adoption, we are listing leveraged tokens on popular exchanges. We’ve listed leveraged tokens on ZBG and GOPAX, and we’re listing on more exchanges in the coming weeks.

B: Leveraged tokens are a great way to be introduced to margin trading as they help you re balance your daily leverage and are unable to be liquidated unless in extremely rare market moves.

Q: How does FTX plan on becoming the number 1 Derivatives Exchange when it comes to Cryptocurrencies? Of course, the exchange has substantial features and a utility token, but how do you aim on getting traders to on board FTX and leave other exchanges such as BitMex or Deribit for example? Do you also plan on becoming more active when it comes to Altcoin Spot Activity to compete with the likes of Binance or Huobi or is the main goal of FTX mainly Derivatives?

S: Our goal is to become as large as we can. That means:

1.growing the international community. We have thousands of people in wechat groups, prominent traders helping out in China and on Twitter, a growing community in Taiwan and Australia, and we’ll keep expanding.

2.creating the exchange that serves everyone’s needs: for people looking for leveraged tokens, to huge volume traders looking for really liquid swaps, to people looking for a fiat onramp/offramp

3.yup going to list more spot markets; right now we just have BTC but we’re listing ETH/USD and USDT/USD this weekend, and aiming to list a spot market for each futures market eventually.

Q: Where is FTX gonna be listing next?

S: Stay tuned!

Q: Do you plan on creating a decentralized exchange of urs like Bdex, idex and other?

S: not high on the stack, it’s hard to do in a way that really has great scalability and can handle large amounts of volume/liquidity gracefully, but we’ll keep it in mind.

Q: Security, scalability, data privacy are very important how did you handle these issues?

B: As above we dont trust third party with our data and all workers are in house.

Q: What is your marketing strategy? How do you plan on attracting traders and sweeping them away from other exchanges to urs?

D: 1) FTX offers products no other exchanges are offering for example SHIT-perps and leveraged tkens
2) Many users have tried FTX have liked it over our competitor exchanes. So the problem becomes getting people to trade on our platform
3) We are coming up with creative solutions such as hosting the trading competition and partnering with top influencers to spread the word

Q: What is FTX’s biggest challenge? Has FTX ever encountered any financial or legal problems? Because currently the cryptocurrency market is still affected by some cyber security laws.

S: biggest challenge is growing the community; you can build the best product in crypto but if no one uses it it won’t do anything. No serious issues so far!

Q: Is the company profitable already? how many employees? how many lambos in parking lot?

D: we prefer private jets over lambos.

Q: What do you need to do to increase brand awareness to attract users?

B: Battle Royale is one way we are hoping to get people interested and trying our exchange. lots of fun challenged and ways for people to win merch even if they arent the best traders :)

Q: What is your strongest advantage that you think will make your team leading the market?

S: 1) listing leveraged tokens on other exchanges allows FTX futures to trade synthetically anywhere
2) we keep on innovating and adding to the exchange.

Q: Are you planning to make the #FTX token have more use cases than what it has now. Maybe something more to improve the utility of it?

D: FTT tokens can be used to “bet on traders” during the trading competition. The prize pool is quite huge.

Q: Where do you see your exchange in a year or two? Will it be a top one based on the development that you are currently having?

D: to be #1 on the volume monitor.

https://ftx.com/volume-monitor

context: https://www.forbes.com/sites/jeffkauflin/2019/07/02/the-anatomy-of-a-fake-cryptocurrency-trade-how-exchanges-create-phony-transactions/

S: that’s the hope! Our goal is $1b+ of volume per day, with the most active futures markets and among the more active spot markets for major coins as well

Q: FTX is a new trading platform, Partnering is very important, so which partners are you looking forward to in the future?

S: The partners we’re most looking for right now are prominent people in the community who can help build out our brand and network; thus https://battle-royale.ftx.com/partners!

Q: For how long are you planning on running Battle royale?

B: 1 practice week, 4 knockout rounds.

Q: What’s the top technical priority right now?

B: Releasing options.

Q: why was the main reason that you started this project instead of knowing about the difficulty and vast competition? what is one unique thing that #FTX will solve?

S: there are a bunch of others but they’re all flawed; we think there’s a big opening for an exchange to come in and execute really well.

Q: What region does FTX work in? In the near future, where does FTX plan to expand the market?

S: we are most active in Asia (China/Taiwan/Hong Kong/Singapore) but also have growing userbases in Australia, western Europe, Turkey, and others.

Q: Have you planned from now on a plan that you will execute if a hack happens on ur exchange? Like Binance has SAFU.

B: We have recently had our exchange security audited. Safety is our biggest concern and we are always looking for new ways to improve it!

D: Over the next few weeks, we will be hosting many lessons, debates, classes and panels for trading thoguth leaders and influencers on our group chat. If you want to learn how to become a better trader please join t.me/ftx_battle_royale

Q: Do you have a token burn model? Do you have any plan to buy back?
What is the difference between trade spot and trade derivative?

S: yup! we buy/burn 1/3 of fees each week :)

D: you can put on leveraged positions.

Q: will you offer previous metals like gold or silver?

S: Thinking about it!

Q: How FTX will build liquidity as it paramount for any new exchange?

D: Alamada Research is one of the main market makers of FTX. Conveinently Alameda Research is one of the largest market makers and liquidity providers in the space trading up to 1bil+ usd per day.

Q: Ok. Thats a wrap for the AMA!

Sign up here: https://ftx.com/#a=1327552

and whoever has the funniest leaderboard name gets a special $100 trade credit from the team!

Thanks for the time guys. Can you invite our group to your tg for more questions and drop a message inviting them to the platform and the battle royale.

D: Battle Royale Group Chat
t.me/FTX_Battle_Royale

Battle Royale Partners Group (Discussions, AMAs, panels, debates and etc — Chat only enable for partners) t.me/battle_royale_partners

FTX Battle Royale Sign Up
ftx.com/battle-royale

also join our FTX group
t.me/ftx_official

Let us know what name you’ve signed up with after you signed up on the leaderboard, Sign up here: https://ftx.com/#a=1327552

and whoever has the funniest leaderboard name gets a special $100 trade credit from the team!

B: Any more questions feel free to join our channels!

S: Thanks all!

Disclaimer: This is not advertising or financial advice. Please Do Your Own Research. I’m not a financial adviser. Always do your own research and only invest solely based on your own findings.

To join in on the discussion feel free to join our group https://t.me/topicroom

ExNetwork

Exploring the future of networks.

Steven Jim

Written by

ExNetwork

ExNetwork

Exploring the future of networks.

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