FTT
FTT is the native token of FTX, a cryptocurrency exchange backed by Alameda Research. FTT was used to reduce trading fees on the exchange, also served as collateral against futures positions, or could be staked to earn interest and get a chance to win NFTs by its holders.[3]
In November 2022, following the collapse of FTX and the exchange filing for bankruptcy, the FTT token saw a decrease of 97.6% from its previous all-time high of $84.18 per token which it saw on September 9, 2021. [4]
Overview
FTT was issued by FTX, the crypto exchange founded by Sam Bankman-Fried and Gary Wang in May 2019. A year after its launch, the exchange introduced the FTT which operated on the Ethereum, Solana, and Binance Chain blockchains.
FTT was made to give holders FTX-based rebates when they traded on the exchange or leveraged FTX OTC. Anyone holding between $1 million to $5 million worth of FTT could get automatically upgraded to a VIP status if they used both services. As of May 2022, FTX offered a 3% trading discount to holders of more than $100 in FTT. For those who own more than $5 million worth of the token, these discounts increased to 60%.[7]
FTT launched with a total supply of 350 million tokens.
Token Allocation
| Allocated To | 100% |
|---|---|
| Backstop Fund | 5% |
| Safety Fund | 5% |
| FTT Liquidity Fund | 20% |
| Team Tokens | 20% |
| Adviser Tokens | 5% |
| Company Tokens | 25% |
| Ecosystem Fund | 10% |
| User Acquisition Fund | 10%[6] |
Utility
Token Burn
At the platform’s inception, it was decided that 33% of all trading fee revenue generated on FTX would be dedicated to the FTX Token Burn. As FTX grew and more fees were generated, the amount of FTT burned increased until half of the original supply of 350 million FTT is destroyed.[14]
Collateral
The FTT token was used as a means of collateral for futures positions and margin trading.[15]
Discount on Trading Fees
Holders of the FTT token were able to get discounts on FTX trading fees, increased commissions on referrals, and earned rewards.[16]
OTC rebates and Burn
Traders who hold enough FTT received rebates from all of their OTC trading on FTX. There was also a repurchase and burning of FTT based on OTC volumes and revenue from the FTX OTC portal, which is powered by Alameda Research.
Socialized Gains
FTX had an insurance fund that was to be used in case of large market volatility to protect its trader's funds. Therefore, in the case of a large increase in the insurance fund, FTT holders would receive a pro-rata bonus on their FTT holdings from the insurance fund.[11][12]
Burning
Buy & Burn FTT
For the platform to keep its deflationary nature, FTX implemented a burn mechanism. FTX announced it would buy and burn FTT equal to one-third of all exchange fees, which includes 33% of fees generated on FTX markets, 10% of net additions to the backstop fund (Socialized Gains), and 5% of fees earned from other uses of the FTX platform. All fees burnt excluded promotional discounts, payment processor fees, referral fees, and third-party costs associated with such revenue.[5]
As of November 16, 2022, FTX has burnt a total of 21,104,887 FTT out of the circulating supply of 328,895,112 FTT.
Staking
FTX also offered its users the opportunity to stake their FTT tokens and earn. Unstaking FTT took 14 days. Stakers were allowed to pay a fee to unstake their FTT immediately. Staking FTT offered its users the following benefits:
- Higher referral rates. Referrers who staked FTT received a higher income from their referees’ fees.
- Maker fee rebates. These users accessed maker fee rebates.
- Free NFTs. Stakers had an opportunity to get free NFTs.
- Bonus votes. Users were offered bonus votes in the polls.
- Waived fees. Stakers received many free ERC-20 and ETH withdrawals daily.
- IEO participation. The platform provided tickets for IEOs on FTX. [8][13]
FTT Token Crash
In November 2022, FTX was accused of using customer funds, leading to its native FTT token crash and the FTX bankruptcy.[9]
Changpeng Zhao, the CEO of Binance, tweeted on November 6 that he was planning to sell off Binance’s FTT funds because of “recent revelations that have come to light,” referring to the CoinDesk report of FTX and Alameda’s balance sheet. Zhao’s announcement led to a rapid decline in FTT’s value over the next day. Bankman-Fried said in a tweet on November 10 that the platform saw $5 billion in withdrawals on November 6.[19]
