Blockchain Investor Analysis

FTX Token

FTT
Current Price $3.84 (+3.31%)
FTX Token (FTT) was issued by digital asset derivatives exchange FTX to provide its traders with a number of benefits that include better OTC spreads, improved liquidity, and discounts on trading fees. FTT is an ERC-20 token that runs on the Ethereum blockchain.

Our Rating:

Market

Problem that it solves

FTT is the exchange token for the FTX derivatives trading platform. FTT does not solve a specific problem but instead adds benefits for those who choose to hold it on the FTX exchange.

Customers

Customers for FTT are their current exchange users. The benefits of holding FTT only apply if the token is used within the FTX ecosystem.

Value creation

The value of the token is based on its overall utility, which is limited in the case of exchange tokens. Holders of FTT will, however, receive discounts on fees, can use FTT as collateral, and earn socialized gains from the FTX insurance fund.

Market structure

The FTX exchange is focused on derivatives and is backed by Binance. The general composition for a derivatives exchange leans towards the more complex side, which means most customers will be highly skilled traders.

Market size

FTX is a tool for traders who want to trade digital assets in more complex ways using futures, forwards, swaps, and options. As it stands, the market for this intricate level of trading is quite small.

Regulatory risks

FTX operates out of Hong Kong, a popular starting point for many digital currency projects. Since the company offers different types of investing on its exchange, it faces higher regulatory risk than other tokens.

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Competitive Advantage

Technology/blockchain platform

FTT runs as an ERC-20 token on the Ethereum blockchain. It appears that FTX has no current plans to transition to their own blockchain.

Lead time advantage

FTX launched its FTT token in 2019, after the likes of Binance, Huobi, and OKEx. Having said that, FTX puts emphasis on derivatives trading while the aforementioned exchanges offer more 'user-friendly' services, so they don't compete in exactly the same space.

Contacts and networks

FTX lists a number of companies that its collaborated or partnered with that includes Circle, Bitfinex, and Paxos.

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Management Team

Entrepreneurial Team

The FTX team has an impressive combination of former traders and software engineers. Both Co-Founders, Sam Bankman-Fried and Gary Wang, attended MIT for undergrad, and they went on to work for Jane Street and Google respectively after graduation.

Industry/technical experience

Upon further research, it's evident that the FTX team is still very young. Most of them are recent graduates, which automatically excludes them from the '10,000 hours' club. However, they certainly have the capacity and talent to move the project forward.

Integrity

The FTX team faced a $150 million lawsuit in November of 2019 after they were accused of 'attacking' the Binance futures platform. Almeda, the incubator of FTX, stated that the accusations were filled with 'laughable inaccuracies' and that the incident was simply an accident that was later resolved.

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Token Mechanics

Token required

Similar to most exchange tokens, FTT is not exactly 'required' for the exchange to operate as normal. Having said that, an exchange token like FTT has utility in that it can be used as collateral and holders will get fee discounts along with tighter OTC spreads.

Value added

FTT offers the same value proposition as other exchange tokens, but it does so on a lesser-known exchange. FTX claims that FTT will be the 'backbone of the entire FTX ecosystem' as the company expands its products and features.

Decentralized

FTX has near total control over its exchange token. The company holds 175 million in treasury tokens that it claims will be released over the next few years. FTX, in an attempt to gradually increase FTT's value, will burn the FTT equivalent of one third of all fees generated on FTX, until at least half of all FTT is burned.

Token supply

There are a total of 350 million FTT tokens in existence with no plans to produce more. 175 million of those are treasury tokens and will unlock over the next three years.

Public exchange

Aside from FTX, the FTT token is listed on Binance, Bitmax, CoinEx, Huobi, and Bitfinex.

MVP

The FTX derivatives exchange was launched in April of 2019.

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User Adoption

Technical difficulty

The FTX exchange is geared towards the more technically capable due to the nature of derivative exchanges. The vast majority of people who use FTX and the FTT token will be advanced traders who already have deep industry knowledge.

Halo Effect

FTX has acquired standard partnerships in the blockchain industry with the most notable being Circle. The team at FTX must expand their network beyond blockchain-based companies in order to establish themselves in the traditional business realm.

Buzz

FTX made waves when they sought a $1 billion valuation for a public sale of tokenized equity back in 2019. Since then, the biggest newsworthy piece about FTX came from its presidential betting feature that allowed users to place digital asset backed bets on the outcome of the 2020 election.

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Overall Score

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Blockchain Investor Analysis

FTX wants to keep traders happy and engaged through the use the FTT token. It provides similar benefits as other exchange tokens while being specifically tailored to a derivative-focused exchange. Beyond the FTX exchange ecosystem, FTT has little to no value to the average user.

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