FTX in 2020 review
I asked SBF for his input on a 2020 end of year review:
Unfortunately that graph is now three weeks out of date and our volume is about three times higher, so I guess I’ve got to explain how we got here from there.
Over the course of the year, our tradable assets and markets, users, volumes, and team all grew tremendously:
Volumes: This was an explosive year for FTX volumes, increasing by over 1,000% compared to last year with over \$385,000,000,000 traded in total and an average daily volume of \$1,060,000,000, while setting a new all time high (ATH) of >\$7,000,000,000 in one day; to put that in perspective, in 2019 we saw only 1 day with over >\$1bn in volume, marking our then-ATH, which is lower than our 2020 daily average. In December alone, we’ve done nearly 200% of our 2019 volume in its entirety, and in one day this year we did more volume than the entire month of December 2019. Also of note, we just recently had our first day of >$1,000,000,000 in daily volume on our spot markets.
Our OTC desk has also experienced extreme growth in volumes, increasing ~10x from the beginning of the year, topping out at $350,000,000 in a single day. We’ve also seen a large increase in volumes for new products on the OTC desk, such as EFPs (exchange of futures for physicals).
Users: The FTX user base in total increased by over 1000%, adding well over a hundred thousand new users to the platform, and our active daily users increased by 786%. In November alone, we added more new users than we had on the exchange in total at the end of 2019.
Supported markets: Going into 2020 we had 410 markets listed; those numbers have since grown nearly 3x to a total of 1100 markets. With the rise of assets on the platform came the ability for traders to utilize more assets as collateral; over the year we added support 71 more assets to be used as collateral (31 more cryptos, 10 more fiat currencies, and 30 tokenized stocks).
In addition to a huge increase in markets and supported crypto assets, we’ve also put in a lot of work to build out our fiat capabilities, adding domestic AUD deposits/withdrawals, SEPA EUR banking, and domestic rails for BRL and TRY via local partners, with more coming out next month!
Exchange capacity: Over the course of 2020 we’ve increased the total number of orders, trades, and users the exchange can support at once by more than a factor of 10. December 2020 was the largest volume month in FTX’s history, and it didn’t have a single minute of downtime or lag.
Valuation: In February of 2020 we decided to extend an offer to our users to invest in FTX at a \$1,000,000,000 valuation, making FTX one of the fastest companies in history to reach unicorn status at just under 9 months from inception. We were delighted to see the response from a wide range of institutions, funds, trading firms, and angel investors; in total we raised over \$15,000,000. While we don’t know for sure what FTX will next be valued at, we certainly would not sell more equity at $1b.
Team: As we’ve seen a drastic increase in users, volumes, and products, we needed to aggressively grow our team as well. From the 15 employees FTX had at the start of the year, we’ve hired an additional 37 employees and had the pleasure of welcoming 20 people to our team through the Blockfolio acquisition, bringing our total headcount to 72, a nearly 500% increase. Through these hirings, we’ll be able to better serve our customers and bring you even more of the products you want. We’re always in the market for driven, talented people to join our team, if you think you’d be a good fit please get in touch!
We should add, however, that we have not scaled up to 2,000 employees overnight and have no plans to. As much as our business is expanding, FTX is defined by the quality and unity of our team, and making sure we don’t endanger that is paramount. We are proud of what we’ve built with a single-digit developer team and would not dream of trading that for a huge workforce of disorganized and outsourced work.
New Features & Products
FTX has built a reputation as an exchange that’s quick to roll out new products and features, and 2020 was no exception. Besides the substantial under the hood improvements we made in the last year, we also released a litany of new features, products, and tools for our users to utilize. We’ve compiled some of what we were most excited about in 2020 to recap the progress we’ve made in building out a one-stop-shop for all traders’ needs.
The product that we were most excited about in 2020 was tokenized stocks. This is something that had never been done before in crypto: giving qualified traders the ability to trade a tokenized stock 24 hours a day, 7 days a week, 365 days a year. These are backed 1:1 with shares held at a regulated brokerage, entitling the trader to all the economic benefits of holding the stock itself: dividends, stock splits, etc. In addition to the spot trading of stocks, we also added support for futures trading of these products, allowing users to trade with up to 101x leverage the same way that they would with any other market on FTX; same collateral pool, same margin requirements, same everything.
With tokenized stocks live, we wanted to innovate further and build something even more exciting, something that had never been done before in crypto or traditional finance: Pre-IPO futures. In the day preceding the Airbnb IPO, there was lots of anticipation around what would happen to the price immediately following the IPO; however this pent up demand to speculate didn’t have an outlet. So… we built one. The Pre-IPO Airbnb contracts represented derivative contracts whose performance was linked to the market cap of Airbnb at the end of its first day of trading on the stock exchanges. These contracts were then automatically rolled over to tokenized Airbnb stock, providing users with the ability to lock in a price for tokenized Airbnb stock before the IPO. We’ve since followed up on this with a pre-IPO market for Coinbase in anticipation of their upcoming IPO.
Spot-margin trading and P2P lending
From its onset, FTX supported most types of trading (futures, options, spot, OTC, fiat pairs) but one thing that we lacked and customers had been asking for was spot-margin trading. Well, we have that now as well; users can trade on spot with up to 10x leverage on a wide range of assets. Plus, for those who just want to buy and hold, you can now get yield on your assets by lending them out to traders. Because of the P2P nature of the funding market, rates are determined by the supply and demand in the market, not by the exchange, maximizing efficiency.
In addition to being able to trade on leverage, users can utilize the lending market to source capital for opportunities off of FTX. They are free to withdraw borrowed capital for use on other platforms, farming, or whatever best fits their needs. For example, it’s now possible to use FTX for BTC collateralized USD loans, so users can deposit BTC and take out a USD loan for a house or that shiny Lamborghini while maintaining your BTC exposure. Alternatively those holding USD can deposit on ftx to borrow crypto for yield farming. We touched on this in a bit more detail in our November digest.
Since launching, we’ve already reached ~$70mm in outstanding loans on the platform.
Leading up to the hotly contested US election, we listed prediction markets for the elections allowing users the ability to long/short a contract that expires at 1 if the candidate wins, and 0 if they lose. This garnered FTX a good bit of coverage in the press (1, 2) and FTX was one of the sources Electionbettingodds.com used to determine its odds. This product was very warmly received by our users and traders in the industry; during the life of the contracts and tokens, ~200,000,000 contracts were traded. In the wake of the election, FTX’s markets continued operating providing one of the only markets in which traders could still gain exposure to the outcome of the election, despite ballots already being cast.
From the beginning FTX was seen as an exchange tailored towards professional traders, and while this gained us a large user base of sophisticated traders, some users wished for a more user-friendly site and improved UI. We conducted many polls about what changes users would like to see from a revamped UI and following months of receiving feedback and product iterations, we launched with a completely new UI, with all kinds of new bells and whistles: average price and cumulative size when you hover over the order book; a side panel displaying all of FTX’s markets with the ability to search, filter, and favorite; tools for managing subaccounts and more. This is an ongoing process with a lot more updates in the pipeline, if you have any feedback or feature suggestions, please reach out and let us know!
The Serum Dex launched in August and one of the benefits the Serum ecosystem provides to SRM holders is the ability to stake SRM for a 4% APY yield. As such, FTX rolled out its first staking product, offering SRM holders the ability to stake their SRM on FTX to capture that yield.
Not long thereafter, we rolled out another staking product, but for FTT. Holders already enjoyed a range of benefits, but we wanted to further reward those with a long-term vision of FTT. In addition to the existing fee discounts FTT holders enjoy, those staking receive maker rebates, increased referral fees, additional votes on upcoming FTX listings, and increased airdrops for tokens such as SRM. We’ve been delighted to see the reaction from the community and so many staunch supporters lock up their FTT in staking to reap these benefits. In the upcoming year, we’ll be looking to expand the benefits of those staking FTT, such as additional tiers, decreased p2p lending fees, and more.
To democratize trading and make it easier for any user–despite a lack of coding experience –to build algorithmic trading strategies, we launched Quant Zone. Through Quant Zone, users select a trigger (a condition that once met, triggers their strategy) and an action or actions to determine what happens when that condition is met. For example, say you have a position on BTC-1225 and you want to roll it over to BTC-0326, you can easily create a strategy to sell your position on BTC-1225 and simultaneously enter a position on BTC-0326. Furthermore, you can minimize slippage by executing this trade in smaller lots by simply creating a rule and letting Quant Zone do all the hard work for you. A few examples of trading strategies that users can build with Quant Zone:
- Basis trades
- Futures position rollovers
To incentivize more trading integrations, we launched our external referral program on June 2nd, allowing those with trading bots to add a referral code to their API calls granting them referral fees from trades executed using their software. We’ve since seen an influx of over 40 trading bot platforms and providers join the program, with tens of millions worth of trades submitted through platforms such as Stacked, 3Commas, and CoinRoutes.
In addition to the above, there are countless other minor features and products (e.g., calculated order entry form, custom logins, voting for new listings/features, etc) that we’ve rolled out over the past year, too many to touch on here. To stay on top of what’s happening at FTX and some of our product launches, keep an eye out for our monthly digest where we take a deep dive on what’s happening in the market and at FTX.
One thing we have been particularly pleased with is the performance of FTT; the price of FTT increased by 270% during 2020, while spending 361 days out of the year above its 2020 opening price of \$2.14 on January 1st. In other words if you bought FTT on January 1st you would have been in profit 98.9% of the year. Less than 2 months into the new year on February 16th FTT surpassed its ATH of \$2.68 set in August of 2019, closing out the day at $2.976
In 2020 FTX purchased and burned 6,549,196 FTT, equivalent to \$42,026,190.73, bringing the total amount burned to 8,548,850 FTT (\$54,729,737). The largest single burn in FTX history in terms of FTT occurred on 11/25 with 247,707 FTT burned at a value of \$1,078,885; the largest single burn in FTX history in terms of USD value occurred just one week later with \$1,100,607.96 worth of FTT burned. (note: since this was originally written, we have once again surpassed our ATH burn in both FTT and USD value on 12/31 with 248,902 FTT bought and burned at a USD value of \$1,435,666; and we’ve surpassed our ATH FTT price, currently at $6.70.)
With the launch of the Serum DEX and FTX’s staking product, FTT holders were able to earn yield on their FTT holdings by way of SRM airdrops. Occurring weekly, FTT holders receive 3 SRM for every 500 FTT held. In conjunction with the staking product mentioned previously, FTT stakers can get 3.372 SRM for every 500 FTT held.
Lastly, we just added FTT perpetual contracts bringing more volume and liquidity to those looking to gain exposure to the price of FTT.
In May 2020 FTX.us, our US-regulated exchange went live, marking our expansion into the American market. Since then we’ve made a lot of progress in building out the best trading platform for US traders. Since its launch, we’ve registered as an MSB and have been applying state by state, obtaining the necessary MTLs to operate in a wholly compliant fashion within the States, and are happy to say that we are currently operating in 49 of the 50 US states. To oversee our expansion into the US, we brought on Sina Nader, formerly the Head of Crypto at Robinhood, as the FTX.us COO. Despite its short history, FTX.us has already established some of the deepest and most liquid order books in the US market, often showing >$100k in orders at best bid/offer. As US market participants have come to discover our combination of liquidity and low fees, we’ve seen significant growth in our userbase and volumes. In addition, we are very pleased to be working with the talented team at Blockfolio to bring an exciting new product to the US market focused on retail customers. This will provide an easy, delightful experience for people who may be new to crypto, or prefer a more streamlined interface than a full-featured exchange, while still reaping the benefits of the deep liquidity on FTX.us. We have over 350,000 users already signed up to our waitlist for this product.
Partnerships & Acquisitions
In August we announced one of the largest deals in the history of crypto: our $150,000,000 acquisition of Blockfolio, among the most well known and widely used products in crypto, touting over six million downloads and hundreds of millions of page views per month. In collaboration with the amazing team at Blockfolio, we have very exciting plans to release a retail-focused trading product, leveraging FTX’s leading liquidity and exchange capabilities along with Blockfolio’s outstanding UI/UX design and marketing, to Blockfolio’s existing users and hopefully a large portion of new crypto entrants.
FMX is a whitelabel product of FTX built by Coin98 in conjunction with the largest Crypto entities in Vietnam. Officially launched in December 2020, FMX serves as a retail-friendly product that Vietnamese locals are more familiar with. The exchange aims to grow out the Vietnamese retail derivatives market which has been largely dominated by CFD type crypto derivative offerings to date. We’re thrilled to be working with the FMX team to help address one of the fastest growing markets for cryptocurrencies.
Gamified trading has seen a huge uptick in interest the last couple of years with apps like Robinhood simplifying the trading experience allowing a new range of market participants. HXRO is one of the leading platforms making that push within crypto. They’ve abstracted away a lot of the complexities of options trading and created a product with a wonderful UI/UX that we believe will see great traction from retail traders. As such, we were thrilled to partner with them as their backend provider for the Tix/Wix product and look forward to working closely with their team in 2021.
Competitions & Giveaways
In 2020 FTX held a total of >20 competitions and giveaways with 7 different partners, rewarding over ten thousand participants with >\$2,200,000 in prizes, >\$1,000,000 in giveaways and >\$200,000 in bonuses, fee rebates, and discounts. Stay tuned to the FTX twitter for more competitions and giveaways in the coming year.
Giving to charity is something we feel very strongly about at FTX. Many members of our leadership are ardent supporters of Effective Altruism and have the goal to give back as much money as possible. To date, FTX and its employees have donated over $20,000,000 to some of the world’s most effective charities and we were quite pleased with what we were able to accomplish in this regard during the past year.
Leading up to the holidays, our CEO Sam, along with Vitalik Buterin and Haseeb Qureshi did a live stream to share their views on giving in crypto, Effective Altruism, and their work in the space. Sam, Vitalik and Haseeb each personally donated $50,000 to a charity chosen by the community.
One of our employees worked with friends in Colombia to spread Christmas cheer and hand out presents to over 300 children in the barrios of Medellin. In addition to toys, the children also received clothes, food, masks and other covid supplies. You can see the kids’ reaction in this photo album we put together.
Through our representative in Nigeria, FTX coordinated with some of the elders in the most impoverished areas of Lagos to donate 400 food baskets to families in need, and they were kind enough to share with us some photos of what they accomplished.
Blog & Podcast
Seven months ago we started the FTX blog and podcast giving our users an inside view into the stories and minds of some of the biggest names in crypto.
The FTX blog gives us a platform to share updates on what’s happening at FTX, insight into what’s happening in the markets, and featured guest pieces from some of the best funds in the space: our friends at CMS shared an inside look at how they approach risk; Split Capital provided an in depth look at the story of BitMEX; and Blockhead Capital wrote up a good analysis of how institutional players are altering the market structure in crypto.
Through the FTX podcast we’ve had the pleasure of sitting down to speak with a fascinating collection of industry players and hear their stories, thoughts, and outlook for what’s to come. Spanning 37 episodes to date with over 60,000 views and listens, people have tuned in to listen to notable guest such as Paolo Ardoino, CTO of Bitfinex & Tether; Dan Matsuzeski, co-founder and Partner at CMS; Andre Cronje, founder of Yearn Finance; Jeremy Allair, founder & CEO of Circle; Roger Ver, Bitcoin OG and founder of Bitcoin.com; and Kyle Samani, co-founder of Multicoin Capital. As we move into the new year, we have an exciting lineup of guests and episodes to release, but are always looking for more people to speak with, so if you have any suggestions on who’d you’d like to see us have on in 2021, reach out and let us know!
Looking forward to 2021
2020 was an exciting year for FTX and we’re very happy with what we accomplished, but in our view things are only just beginning and we’re setting our sights high for 2021. We have ambitious goals for expanding into the US with FTX.us; continuing to release innovative, industry-leading products at breakneck speed; and continuing to increase our market share until we are the largest exchange in the space. Here are a few things that we will be devoting a lot of effort towards in the new year.
FTX.us: With FTX.us live and the groundwork done allowing us to operate compliantly in 49 states, we will devote a lot of effort in building it out into the leading US exchange the same way that FTX.com has established itself internationally. We have a lot in store for FTX.us and are very excited to start rolling out more products for our American users.
Retail focused app: Millions of people already check their Blockfolio over 10 times a day on average to stay on top of the market. With Blockfolio’s mission to be the easiest way for anyone to participate in the crypto future of finance, it’s only natural to add trading to the mobile experience people already know and love. Look for this major update in early 2021 and we can expect to see additional retail-focused FTX trading products make their way into Blockfolio throughout the course of the year. Join the waitlist to receive updates!
OTC desk & institutional trading products: While our OTC desk’s volumes have grown tremendously since we launched in 2019, the tech powering it hasn’t seen many upgrades. That will change in Q1 2021 as we look to roll out streaming prices, partial fills, TWAP capability, and a completely revamped UI. With the increase in institutional activity in the space, we expect to see continued growth in volumes from products tailored to their business.
Prediction markets: Following on the back of our success with the presidential election markets, we’ll be looking to expand our prediction market offering to more events such as sports, e-sports, midterms, and more. This process is already in motion with Superbowl prediction markets live on the platform and more exciting markets to come in the near future.
Options: One of the most common requests we received this year was to expand our options offering to include an options chain or CLOB. Discussions are already underway on how to expand and improve on our options products and expect this to become an increasing portion of derivatives volume in 2021. In addition to on-exchange improvements, we also plan to complete an integration with Paradigm in Q1 allowing Paradigm and FTX users to take advantage of the great work Anand and team have done with their product.
More assets and more markets: As the crypto industry continues to grow, there’s ever-increasing demand to trade more and more assets. As we move into 2021 we will look to aggressively expand our supported assets and listed markets for the most in-demand coins. We’ve already listed 5 new markets on FTX in 2021 and the year is only 3 days old.
FTT benefits & ecosystem: Already in 2021 we’ve added FTT perpetuals; more rewards for FTT stakers and more tiers to address the needs of a wider range of users; and had our largest buy and burn ever. Expect the product growth to continue with more use cases, benefits, and burning!