- What is FTX, and how does FTX work?
- How does FTX make money?
- NFT Sale, Minting, and Listing Fees (FTX NFT Marketplace)
- Trading Fees (FTX Exchange Fees)
- Capital Gains From Investments (FTX Ventures)
- Interchange Fees (FTX Visa Card)
- FTX subsidiaries, acquisitions, and exits
- FTX profit and revenue
- What is the FTX business and revenue model?
- FTX funding, net worth, and valuation
How does FTX make money? Well, here is a full, in depth, breakdown of their four (4) revenue streams and the different products and services they offer, as well as the FTX business and revenue model, how much FTX makes per year, and how FTX works.
What is FTX, and how does FTX work?
FTX is a cryptocurrency exchange platform to buy, sell, and trade more than 300 cryptocurrencies like BTC, ETH, USDT, USDC, DOGE, and SHIB.
Founded in 2019 by Sam Bankman-Fried and Gary Wang, FTX has quickly grown to more than 1 million registered users on its platform as well as handling $385 billion of exchange volume in 2020.
So, how does FTX work? To use FTX, users can first download their mobile app in the Apple App Store or Google Play store; or visit their website and sign up for an account
Once an account is created, users can buy and sell from more than 300 cryptocurrencies, as well as search for, track crypto prices, and more.
How does FTX make money?
According to FTX, the company now has more than 1 million registered users on its exchange and handled $385 billion of exchange volume in 2020.
So how does FTX make money off of all those registered users and exchange volume?
Below is a breakdown of how much money FTX makes and its revenue model. Including all revenue streams and how much they charge for their services.
Here are the 4 ways of how FTX makes money in 2022
FTX has a revenue model that makes money in four (4) ways; through NFT fees, trading fees, capital gains from FTX Ventures investments, and interchange fees from their FTX debit card.
#1. NFT Sale, Minting, and Listing Fees (FTX NFT Marketplace)
FTX branched out into the NFT space by launching its own NFT Marketplace in October of 2021.
So, how does FTX make money from NFT sales? FTX makes money by collecting a fee every time a seller lists, mints, and sells NFTs on their marketplace. You can see how much the fees are below.
FTX NFT Fees:
- Seller fees: 2% fee to the seller on each NFT sale or trade
- Mint / list fees: $1 flat fee every time a user mints or lists their own NFTs to the FTX Marketplace
Note: FTX makes money when the NFT is first sold, and every time it’s resold thereafter.
#2. Trading Fees (FTX Exchange Fees)
As with any exchange, FTX makes most of its money from its trading fees from the trades performed on its exchange platform.
FTX uses a maker-taker fee model which is commonly used on cryptocurrency exchanges. And how they determine how much to take per trading transaction is determined by the users’ tier level (there are 6 tiers). Their tier level is based on the users’ last 30 days of trading volume.
In short, the more a user spends on the exchange, the lower their fees are.
Tier 1 is a 30-day trading volume of less than $2 million USD where a user is charged 0.02% to 0.07%. Whereas, a Tier 6 account that has a 30-day trading volume of $50 million+ USD is charged between 0% to 0.04%. And then there is everything else in between.
You can see all 6 tiers of 30-day trading volume with fee breakdowns, here. You can also see the simplified version below.
FTX trading fees:
- Maker fee: 0% to 0.02%
- Taker fee: 0.04% to 0.07%
Note: FTX collects fees from both buyers and sellers.
#3. Capital Gains From Investments (FTX Ventures)
In January 2022, FTX expanded its business into the venture capital sector with FTX Ventures.
FTX Ventures is a $2 billion investment fund to invest in equity and or tokens, at any check size and stage of blockchain; which has currently made 28 investments at the time of writing this.
#4. Interchange Fees (FTX Visa Card)
FTX also makes money off of the interchange fees they receive from the FTX visa cards they issue to users who have an FTX account, are residents of the eligible regions, and are approved.
How does FTX make money from interchange fees? FTX makes money whenever an FTX cardholder uses their Visa issued card.
When this happens, Visa charges the merchant an interchange fee between 1.15% + $0.05 to 2.40% + $0.10 of the charge amount. From that, Visa gives a percentage of its interchange fee revenue to FTX. Although it’s unclear what percentage FTX receives from Visa.
FTX subsidiaries, acquisitions, and exits
To date, FTX has made a total of 6 acquisitions, 19 investments, 6 lead investments, and 1 successful exit.
FTX profit and revenue
FTX has not released any official reports in regards to company earnings.
Note: Because FTX is a privately held company, they are not required to make their annual reporting, such as Form 10-K’s, pubic.
What is the FTX business and revenue model?
FTX makes money through a few revenue models that they combine within their company, they are:
- Fee for service (FFS) business model
- Interest based business model
- Business to business (B2B) business model
- B2B2C (partnerships) business model
- Mergers and acquisitions (M&A) business model
FTX funding, net worth, and valuation
According to FTX’s Crunchbase profile, FTX has raised $1.7 billion over 7 rounds and has a valuation of $32 billion as of February 2022.