One of the most exciting Exchange Tokens/Coins that I have ever known is the token of the FTX exchange (known as FTT). Although it was established in a short time ( as of 2019), FTX has gradually become one of the new names. Most likely, it will be on the list of the top cryptocurrency exchanges between 2021 and 2022.

So what is the potential of FTT, and what are your expectations for the future of FTX exchange? Let’s read the below review together:

1. FTX Overview

FTT is the token of FTX exchange, which was introduced to help the FTX exchange increase the influence of the FTX ecosystem.

Launched in 2019, FTX is currently climbing rapidly to No. 5 on Coinmarketcap’s Cryptocurrency Derivatives Exchanges Ranking. FTX and FTT are backed by Alameda Research, one of the leading Market Making/Trading companies in the crypto market.

As FTX is an exchange specializing in derivatives, it can leverage all projects listed on its platform. More precisely, FTX also has its Leveraged Tokens that everyone can apply leverage. For instance, they introduce a “TRUMP” token for those who want to “bet” for him to win the US presidential election in 2020. If Mr Trump wins, this token will rise and vice versa.

That sounds interesting. So what is so special about FTX, and why should we pay attention to FTT – the exchange’s token?

3. Problems

Currently, cryptocurrency exchanges are facing a problem that does not exist in the traditional Futures market. Sometimes, to ensure the exchange's liquidity, some traders will have to sacrifice their profits when the market fluctuates sharply. It happens especially when some traders' accounts are too liquid.

One of the most well-known examples is the OKEx derivatives exchange. In August 2018, a trader had accumulated a Bitcoin futures position worth more than US$400 million. When the exchange caught on, they required the trader to lower their leverage but were refused. The exchange was forced to liquidate the entire position, resulting in a loss of approximately $27 million.

It happens with most traditional markets as they allow Banks to act as liquidators and risk guarantee for both traders and exchanges. In Crypto, Banks should not exist.

As a result, Alameda Research introduced FTX to solve the above problem.

4. FTX solutions.

In response to the above issue, FTX has three steps to liquidate orders.

First ****of all, if the order reaches the liquidation level, FTX will carefully close the position and carefully check whether the order is dangerous for the exchange.

After that, FTX has its liquidity program (possibly provided by Alameda Research) to provide liquidity to accounts that may go bankrupt (unlike liquid, bankruptcy refers to the overwhelming negative amount in the account balance, jeopardizing both exchanges and the market).

Finally, they will use insurance funds to ensure that users do not lose, similar to other exchanges that use insurance funds. The difference here is that FTX will intervene early on so that the account does not burn out too quickly, like in the example mentioned above.