FTX vs Binance: Which Exchange is Better To Use?

In the crypto market, derivatives exchanges, like Binance, Bybit, and FTX are the new gold mines. Derivatives platforms are competing hard with other exchanges to make a statement in the crypto world. For investors and crypto traders, it means access to multiple and unique trading options, better products, high quality services, and competitive trading fees.

In recent years, many new crypto exchanges have entered the market, making it saturated but only a few of these exchanges meet the expectations and benchmark set by the traders.

Here is a comparison of the two leading derivative exchanges, FTX and Binance exchange.

Overview to Spot & Derivative Trading

Cryptocurrency exchanges are where people go to trade digital currencies.

Suppose if you want to trade USD for a Bitcoin you will be required to use an on-ramp or broker to exchange USD for Bitcoin or USDT (a stable coin pegged to the USD) then use an exchange to swap the BTC or USDT for ETH. This model of trading is also known as spot trading.

Now this gets a bit complex with the development of derivative platforms offering contract-based trading on the price of underlying cryptocurrency assets. In simple words, if you purchase a BTC-PERP Bitcoin perpetual futures contract then its value will follow the price of Bitcoin.

Note: Derivatives functions such as futures and options are complex financial tools and should only be used with a proper background knowledge and experience.

What is Binance?

Currently Binance exchange, is known as one of the markets leading spot exchanges, however, the platform also possess a large derivative market as. The entire platform is developed, and it keenly focuses around buying and selling crypto to hold in Binance crypto wallets.

Whereas FTX is completely a derivatives exchange that possesses majority of trading volume on its futures markets. The exchange is “built for traders, by traders”. This exchange is a creation of famous Alameda Research which is an association directed by Sam Bankman-Fried, one of the biggest market makers. He was also known for being one of the leading arbitrage traders in the world from 2018-2021.

Supported Derivatives Tools & Leverage

Both derivatives platforms Binance exchange and FTX offer a wide selection of trading options. Here are some FTX offerings:

• MOVE contracts: This is the most unique aspect of FTX exchange. Explaining it in simple words, these are futures contracts where trader can trade on Bitcoin and profit irrespective of the direction. Moreover, its expiry comes in daily, weekly, and quarterly basis. 
• Leveraged tokens: User can open a leveraged position on 45 different ERC-20 tokens with a maximum leverage of more than 3x.
• Options: Bitcoin options contract are settled in USD.
• Futures: User are facilitated with quarterly expiry futures market and more than 150 perpetual futures contracts.

The FTX exchange provides a total of 101x leverage. But, depending on user trading requirements, they are allowed to set the leverage ratio ranging from 50x to 101x from the settings page. 

Now, coming to Binance, just like FTX it also offers multiple trading options. here is the rundown of some key offerings by Binance:

• Binance Leveraged Tokens: BLVT are exchangeable Binance crypto assets on the spot trading market, providing traders the leveraged exposure to any underlying asset. Now every BLVT represents a pair of perpetual contract positions as the leverage of such contracts occur between 1.25x to 4x. 
• USDT-M Futures: These are basically the quarterly and perpetual futures contracts, settled and margined with USDT. The default leverage level set here is approx. 20x and the maximum level of leverage is 125x.
• Binance Vanilla Options: These are more like European-style Option contracts that allow the user to take trade position on Bitcoin. Just like vanilla options it is also settled with USDT, the leverage level depends on the strike price and time to expiry of the option. 
• COIN-M Futures: These are a kind of perpetual futures contracts enabling users gain experience to a crypto without even owning it. However, these contracts are also margined and settled with cryptocurrency. The maximum leverage allowed is more than 125x.

Key Takeaways!

has a wide range of product offerings and provides higher leverage on all products as compared to FTX. However, FTX and Binance are both efficient and leading platforms for crypto derivatives trading. Both exchanges provide flexibility, safety, and wide trading options to users. It entirely depends on the trading preference of users, which exchange to select.

Article source: https://article-realm.com/article/Fashion/Shoes/13650-FTX-vs-Binance-Which-Exchange-is-Better-To-Use.html