Sam Bankman-Fried: What Sets FTX Cryptocurrency Derivatives Exchange Apart



We'd like to thank Allah grant for their support of the PODCAST. And one of. The things I've heard about. That you know it's it's a platform that very well designed for traders and you know your product designed comes lock from your experiences running in active trading firm. What does that mean tangibly got? What are the sort of things that make FBI six different than other exchanges? Of things there and I'll just give a few examples although a lot of this is in the details your lot if they like a lot of just small tweaks in decisions that we made. What are some of the bigger things so? One thing is and maybe one of the bigger inserts like Moose you know sort of most visible things is how margin is handled. I don't know if you've like amateur of used. DRIFTS, exchanges before but I certainly the like the norm. Is. That every single merchant account is separate and what I mean by that is like you know. All right. So you WANNA trade. You know you WANNA trade bitcoin derivatives shot pope acquaintan- in marching your trade. US. Derivatives are put us in another merchant account. You WanNA trade you put Ethan. Third YOU WANNA. Trade spot put that Nina a fourth account yawn treat spot margin while there's a fifth account. And many of these places have like a hundred accounts or or something have way more than that, and it just quickly becomes like you know if you if you haven't spent like five hundred hours. Building out like a dedicated automated system to march to. A managing this it's like really hard to handle. You know like you know there's just sort of like Oh. God like I really. WanNa trade you know pch futures right now what do I need to do? Okay. Well, first of all, I need to remove some funds from whatever account there and now after us by spot pch for so why what the fuck like you're you're the whole point shrink futures not have you know they don't have to have h but now the first step of trading features buying. Tokens, and then you move them into account and then you can start trading and he each scalp position you have to reach everything's, and then you start thinking about your risk profile whereas a rick why go after by H in order to buy. Yeah. It's a really good question because a lot of these venues the margin for H. futures is H. The only thing you're allowed to post collateral is spot bitcoin cash and so I want. Bitcoin cash you need fiscal bitcoin cash. As you watch right US futures, you need fiscal us, and so you end up having to manage a spot book and all of these transfers all within the same exchange just to be able to trade the futures within it, which which served really shouldn't be necessary on and then it gets worse when you start thinking about your risk profile, do you think about liquidations and these are all independent margin accounts even though they're within the same exchange and they're all within your account? And it's what that means that they're separate liquidations. For, every single one and so you have to like manage like make sure that none of these fifty accounts you have with them. This one exchange are closed getting liquidated if they are you have to go in and like move funds around. and. So this is sort of like the extreme version of isolated margin as opposed to cross margining, and it's just like a huge pain to to manage and you know I mean it's a huge pain for a sophisticated trading firm with thoughts that move capital around automatically like you know it's so much bigger of a pain for I like manual traitor, you know who like What keep constantly checking all these things like logging onto you move around their capital do some trades so on f There's one account you can put anything in it Y- you dollars in other. Bitcoin cash east, whatever you want it all starts. And it all powers, all of the futures on it. and. You never need to reshuffle things, and so it's sort of like gets rid of that whole problem. Unless you want to and if you want to if you want to isolate margin so that you have like clean train records split up or so that you have margin on winced protected from a liquidation on the other than you can open up a different sub account and do that. So you can customize how you want like by default you don't have to. So. Serve like one example for thing where it's just a pain to use a lot of these platforms and tried to make it. As flexible as possible and and you another piece of that, which is different is that you know if tex will take a lot of different things quadral and so it's not like you have to store your clutter role in in. In in Bitcoin, you can do either and they'll they'll both payroll the future. So that's like one example for

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