FTX (FTT)

FTX is a Cryptocurrency Derivatives Exchange

Alameda Research is a trading desk, it has close ties with FTX (and the same owner) and its interconnectedness is up for discussion (16-3-2021).

Basics

• Based in: Hong Kong (29-10-2020). The company was incorporated in Antigua and Barbuda, but is headquartered in Hong Kong.
• Founded in: 2019 (Alameda in 2017)
• Mainnet release:
• Also does prediction markets.
• Became known (25-6-2020) for gaming the BAL token when it launched.

• From CMC (22-1-2020):

"FTX is owned by FTX Trading LTD, a company incorporated in Antigua and Barbuda. FTX was incubated by Alameda Research, a cryptocurrency liquidity provider. FTX’s leveraged tokens aim to provide a clean, automated way for users to get leverage. FTT is the FTX ecosystem utility token. Holders of FTT reportedly receive benefits such as:

• Weekly buying and burning of fees
• Lower FTX trading fees
• OTC rebates
• Collateral for futures trading
• Socialized gains from the insurance fund"

• From Messari (22-1-2020):

"FTX is a cryptocurrency derivatives exchange launched in April, 2019 that offers futures, leveraged tokens and over-the-counter (OTC) trading. It is backed by Alameda Research, a trading firm accounting for between $600 million and $1 billion of volume a day or roughly 5% of global volume.

FTX was designed to prevent clawbacks using a three-tiered liquidation model that closes positions with rate-limited orders and leverages an insurance fund to prevent customer losses. Rather than fracturing liquidity across various tokens, collateral is shared in one universal stablecoin wallet to mimic the traditional futures market. FTX also allows traders to take leveraged or short positions without trading on margin or futures with their Leveraged Tokens that mimic the experience of trading on spot markets but allow 3x, -1x or -3x on various tokens. The FTX OTC desk is powered by Alameda and trades around $30 million per day with no fees."

History

• From The Generalist (8-8-2021):

"Alameda is a crypto investment firm. It was founded by Sam Bankman-Fried (SBF), Gary Wang, and Nishad Singh to capitalize on the arbitrage opportunity presented in the Asian markets in late 2017. It has grown in the intervening years, becoming one of the most influential allocators in the ecosystem, investing directly in protocols as well as private companies. Several sources confirmed that Alameda may be the single largest investor in the crypto ecosystem, trading billions in assets a day. Alameda was FTX's primary market maker in its early days, providing liquidity. The firm makes up a much smaller percentage of volume today."

Audits & Exploits

• Bug bounty program can be found [insert here].

Token

Utility

• From Messari (22-1-2020):

"33% of all fees generated from the exchange, 10% of net additions to the insurance fund, and 5% of fees from other uses of the platform will be used for repurchase and subsequently burned until half of the total supply is destroyed."

• From The Generalist (8-8-2021):

"Much like Binance’s BNB, FTT grants discounts on fees, along with other benefits. If you choose to stake FTT, perks include enhanced voting power, bonus NFTs, airdropped rewards, and further rebates. FTT can be used towards an account’s collateral requirements, too, something we’ll unpack in a moment. To maintain scarcity and create pricing pressure, FTX “buys and burns” FTT."

Token Details

• Is a centralized token (14-10-2020).
• From their website (20-4-2020):

"FTT — FTX Token

FTT will get socialized gains from the insurance fund on FTX.

FTX will buy and burn FTT equal to 33% of all fees generated on FTX markets.

FTT holders will get a fee discount and tighter OTC spreads.

FTT will be usable as collateral on FTX."

• From their About Us (20-4-2020):

"FTT is the FTX ecosystem utility token.  Holders of FTT receive numerous benefits, including:

1. Weekly buying and burning of fees
2. Lower FTX trading fees
3. Collateral for futures trading
4. Socialized gains from the insurance fund"

Tech

• Whitepaper can be found [insert here].
• Code can be viewed [insert here].
• Built on: Solana (27-7-2020)
• Programming language used:

Transaction Details

• Capacity (TPS):
• Latency:

Their Other Projects

• The exchange offers (8-8-2021) the following products:

Tokenized stocks, Leveraged tokens, Volatility tokens, a prediction market and a fiat market.

Blockfolio (changed name into FTX as well)

• Changed name into FTX (like the FTX father company). No longer Blockfolio (28-7-2021).

• From EthHub #129 (1-9-2020):

"FTX has acquired popular crypto price tracking app Blockfolio for $150 million in one of the largest acquisition deals in the digital asset space this year."

DEX

• From Crypto Briefing (27-7-2020):

"FTX is building a DEX, Serum, on the Solana blockchain with the help of partners like Kyber Network and Multicoin Capital. Serum is cross-chain comptaible, giving it access to liquidity on DeFi dApps on Ethereum. The DEX will run on a central limit orderbook, but will still operate in a trustless manner."

NFT Marketplace

• Has launched a new NFT marketplace (3-6-2021). Seems to only have really launched now (6-9-2021).

Roadmap

• Can be found [Insert link here].

Usage

• Revenue grew 1,000% over the last year (8-2022), topped $1B. Profitable, with 27% operating margins. Most biz coming from derivatives, outside U.S. - Global footprint growing through M&A. Revenue jumped from $90m in 2020 → $1.2b in 2021. Operating income spiked from $14m → $272m in 2021. Acquired ~15 smaller companies around the world to expand global footprint (Surprisingly, FTX US only makes up ~5% of total revenue).
• From The Generalist (8-8-2021):

"FTX grew daily trading volume from $50 million to $150 million in less than two weeks. It jumped to $300 million two weeks after that.

After its most recent fundraising round, FTX noted it was reducing the available leverage on the platform to 20x. As part of the announcement, the company revealed that leveraged trading makes up a relatively small portion of volume on the platform. Per SBF, the average investment on margin was 2x at the time of the update.

Reviewing data from March of this year, Turkey is actually FTX’s largest market from a userbase perspective, with more than 20% coming from the country. Others in the top ten including Korea, Gibraltar, Australia, China, and Japan.

These shares change when analyzing on a volume basis. Most volume comes from institutions, which FTX doesn’t nationalize. Beyond that though, most trading comes from Taiwan, followed by China, and Hong Kong. This breakdown indicates that FTX’s power base is really in Asia, with Singapore and Korea also included.

Finally, looking at revenue by country, we get yet another view. Though there are fewer Korean than Turkish users, for example, they are the biggest revenue contributors. Switzerland, Australia, Gibraltar, and Canada round out the top five. It is perhaps telling that the United States is not included in this analysis.

We can see that FTX’s userbase benefits from some serious whales. More than 25% of total volume comes from a grouping that moves more than $30 billion per month. More than 50% comes from a segment that moves more than $3 billion. This is a market designed for those with considerable appetites. "

Projects that use or built on it

• Serum

Competition

• Binance and other exchange tokens.

Pros and Cons

Cons

• Their token is centralized (14-10-2020).

Team, Funding, Partners

Team

• Sam Bankman-Fried; CEO and Founder "Before founding Alameda and then FTX, Sam was a trader on Jane Street Capital’s international ETF desk. He traded a variety of ETFs, futures, currencies, and equities, and designed their automated OTC trading system.  He graduated from MIT with a degree in physics."
• Gary Wang; CTO and Founder "Gary was a software engineer at Google prior to founding Alameda and FTX with Sam.  There, he built systems to aggregate prices across millions of flights, decreasing latency and memory usage by over 50%.  He graduated from MIT with a degree in Mathematics with Computer Science."
• Sergei Chan
• From their About Us (20-4-2020):

"FTX is owned by FTX Trading LTD, a company incorporated in Antigua and Barbuda.

FTX was incubated by Alameda Research Ltd., a top cryptocurrency liquidity provider.  FTX has had industry-leading orderbooks from day one."

• During the market crash of 2022 it still continued hiring and had approximately 250 employees.

Funding

• Chris McCann was an early investor in FTX (20-3-2021).
• From their About Us (20-4-2020):

"FTX was founded with the goal of donating to the world’s most effective charities.  FTX, its affiliates, and its employees have donated over $10m to help save lives, prevent suffering, and ensure a brighter future."

• Aptos; took part in their $200m strategic round (15-3-2022). Lead their next round of $150M (26-7-2022).
• 1inch. Participated in a $2.8M raise for 1inch (11-8-2020).
• Bastion; part of the $9M Series A raise, announced on the same day as its token got launched (21-4-2022).
• Bitvo; got bought (17-6-2022).
• BlockFi; made a $680M credit deal with FTX US and an acquisition path (2-7-2022). Bought it for $240M on 1-7-2022.
• Frontier. Participated in a $1.85M seed round for Frontier (1-9-2020).
• LayerZero; part of the Series A of $135 million (31-3-2022).
• Mina; Led a $92M raise on 17-3-2022.
• mStable. They invested in mStable together with Alamada Research (which also invested in Frontier)

• Paxos; part of their $300M D Series (29-7-2021).
• According to this twitter thread (7-9-2020):

"Binance backs Band, FTX (aka SBF Alameda, the new sushi controller), and Serum (via 3commas Cap)."

Update (25-7-2021): SBF has bought back the Binance shares in FTX, presumably due to regulatory issues around Binance heating up.

• Circle; was one of the investors in the $440M fundraise for Circle (28-5-2021).
• From CoinDesk (30-6-2021):

"Tom Brady and his wife, Gisele Bündchen, will each be taking an equity stake in FTX Trading Ltd., the company behind Sam Bankman-Fried’s FTX.COM and FTX.US.

The couple will receive crypto as part of a deal that makes Brady an exchange ambassador and Bündchen FTX’s environmental & social initiatives adviser, a press release Tuesday said. The specific financial terms of the long-term partnership with Bankman-Fried’s exchange company weren’t disclosed. FTX subsidiary Blockfolio is also involved in the package."

• From Decrypt (21-9-2021):

"FTX has raised $900 million from over 60 investors, bringing its valuation to $18 billion. Investors including Sequoia Capital, Paradigm and Coinbase Ventures. More than 60 investors participated in its Series B fundraise—the largest ever for a crypto exchange. Revenues have increased over tenfold in 2021, and over a million users now use the platform, which averages over $10B of daily trading volume.

• Sino Global launched a $200 million fund with backing from FTX (26-10-2021).
• StarkWare; took part in the $100M Series D (25-5-2022)
• The company raised $420 million from 69 different investors (22-10-2021):

"According to the announcement, FTX said Ontario Teachers’ Pension Plan Board, via its Teachers’ Innovation Platform, Temasek, Sequoia Capital, Sea Capital, IVP, ICONIQ Growth, Tiger Global, Ribbit Capital, and Lightspeed Venture Partners participated in the latest financing."

• Had a 3AC position which it liquidated after the UST fallout in May 2022.
• FTX and Alameda Ventures published a joint partnership proposal with the recently declared bankrupt Voyager Digital that would see FTX provide early liquidity to customers of Voyager (25-7-2022). Voyager rejected the proposal out of hand as “a low-ball bid dressed up as a white knight rescue,” according to a court filing.

Partners 

• Reddit has taken FTX as the partner for on-ramping (10-8-2022).
• From their About Us (20-4-2020):

"FTX is proud to have partnered or collaborated with many leading cryptocurrency firms, including but not limited to:"

Alemeda Research, Circle, BUSD, HUSD, TrueUSD, Paxos, BiLira, Fenwick and West, Galois Capital, Proof of Capital, TomoChain, Bitfinex, Mars Finance, Consensus Lab, CoinGecko, BitMax, CoinEx.com, FBG and Lemniscap.

• Is a partner with HUSD, also according to their website (20-4-2020).

Alameda Research

Basics

• Started in late 2017 by Sam.
• Quant trading firm / trading desk

• From The Defiant (13-7-2021):

"When asked about farming and dumping SUSHI tokens and reportedly shorting YFI on our podcast in November 2020, , Alameda chief Sam Bankman-Fried said his firm’s involvement in DeFi was motivated by short-term profits. He added that Alameda will not seek to have a long-term impact on protocols via governance."

• From Bankless (27-8-2020):

"Alameda Research took advantage of with the Balancer Protocol. As Sam Bankman-Fried documented on Twitter, Alameda was able to game the Balancer Protocol and should have received a ton of $BAL as a result. However, by decree of Discord chats, Balancer decided to enact a whitelist, meaning Alameda would not receive the rewards."

Reputation

• The trading desk is respected for its success at making money, but also deemed notorious; Rekt going so far as calling it "one of the most savage trading desks in the business".
• Alameda used CREAM as to "taking over a decentralised protocol by depositing his own centralised tokens, and using them as collateral to short other decentralised tokens." (9-10-2020)
• Alameda has been blamed for shorting YFI in the past (12-10-2020)

Funding

• Has been investing with CMS and Genesis Capital on at least two projects (24-2-2021). Also together in the aUSD fund.

• Acala's aUSD Ecosystem Fund; one of the founding funds to grow the Acala stablecoin (23-3-2022)
• Alchemix; part of a $4.9 million funding raise (15-3-2021).
• Anchor; Do Kwon mentioned them as part of a $20M raise, calling the participants the 'Anchor whales' (16-3-2021)
• APY.Finance. Participated in a $3.6M seed funding round for APY.Finance (26-9-2020).

• Arbitrum; took part in the $120M raise (1-9-2021)
• Armor.Fi. Joined Armor as one of its 'strategic investors' (31-1-2021).
• Balancer. From Paradigm (10-11-2020):

"Balancer Labs announced that Pantera Capital and Alameda Research have made an investment in Balancer, through the direct purchase of BAL tokens from the Balancer Labs treasury."

• ChainSwap; backed it (13-7-2021).
• Dune Analytics; Dune mentions them as one of their backers (22-3-2021).
• Frontier. Participated in a $1.85M seed round for Frontier (1-9-2020).
• Hedgehog Markets; participated in a $3.5M funding round (27-7-2021).
• Helium; part of a $111M token sale (11-8-2021).
• InsurAce; participated in a $3M raise (4-3-2021).
• KeeperDAO; purchased 42,800 ROOK tokens (14-2-2021).
• Linear Finance. Participated in a $1.8M seed round for Linear Finance (9-9-2020).
• Liquity; part of their $6M raise (29-3-2021).
• Maple Finance; participated in a $1.3M raise (12-2020).
• Maps.me; participated in its $50M funding round (18-1-2021).
• Mask Network; part of a $2M funding round (17-11-2020).
• MathWallet. Invested $7.8M in MathWallet together with Multicoin Capital (12-10-2020).
• Messari; Alameda Capital took part in the $21M funding round (5-8-2021).
• mStable. They invested in mStable together with FTX.
• Nerve Finance; part of a $2M token OTC (12-4-2021).
• Opium Protocol. Part of a $3.25M raise (2-11-2020).
• Oxygen; from Coindesk (24-2-2021): "is leading a $40 million investment round in Oxygen, which aims to do for DeFi what Robinhood has done for stocks – only without the reliance on centralized legacy settlement systems. Alameda is joined by Multicoin, Genesis Capital and CMS in the round."
• Perpetual Protocol. Part of a $1.8M raise for Perpetual Protocol (1-9-2020).
• Razor Network; part of a $3.7M funding round (4-11-2020).
• Reef Finance; Alameda Research bought $20 million in REEF tokens according Reef (12-3-2021). Turned into a shit show in which both sides blamed each other (16-3-2021).
• Saddle; is mentioned as an investor on Saddle's website (17-6-2021).
• Secret Network; bought SCRT in an OTC deal (16-1-2022).
• Solana; part of a $314M raise with a token sale (9-6-2021).
• StarkWare; part of a $75M raise (24-3-2021). Took part in the Series C raise of $50m (17-11-2021).
• UNION. From Decrypt (10-11-2020):

"Raised $3.9 million for a platform to insure individuals and investors. 3 Commas, AAM, Alameda Research, Alpha Chain, Black Edge Capital, Solidity Ventures, and Spark Digital Capital provided the bulk of the capital for the startup, which is eyeing a platform release “in the coming months.”

• Voyager; Alameda was the second biggest borrower (6-7-2022) after 3AC, it did later on say they are ready to pay back the loan any time. All of this is confusing, since Voyager secured a $500M line of credit from Alameda to deal with its issues just on the 26th of June before.

Team, funding, partners

• Sam Bankman-Fried; CEO
• FTX says it has collaborated with them, they were also part of the same seed round for Frontier.
• The REN team has joined Alameda and says Alameda "will be helping to accelerate the decentralisation of RenVM by participating in the Greycore early on (in Testnet and Mainnet)" (2-2-2021).
• Mentioned (13-7-2021) as part of the Investor Network of Asia DeFi Network (ADN).