# FTX Financial Model

FTX is a leading digital-assets exchange offering crypto spot, futures, leveraged tokens, tokenized equities, OTC, and prediction markets.

- Canonical: https://finamodel.com/startups/ftx
- Excel download: https://finamodel.com/startup-models/ftx.xlsx
- Category: Crypto/Web3
- Model type: Marketplace / GMV
- Funding round: Series B
- Funding: $1B
- Founded: 2021
- Geography: Global (international exchange blocks restricted jurisdictions incl. US); US retail served via West Realm (Blockfolio back-end). [DECK slide 8]
- Customer: B2C

## About the company

FTX was a digital-asset exchange offering spot, futures, leveraged tokens, tokenised equities, OTC services, and prediction markets. Its international platform targeted global trading activity, while US retail distribution was served through West Realm and the Blockfolio back-end rather than the restricted international exchange.

The deck presents a broad trading-product suite but does not disclose a funding round, valuation, fee schedule, or operating financials. That absence matters: exchange economics depend less on the number of listed products than on product-level liquidity, trading participation, and the fee yield retained after market-making and incentive costs.

Build a monthly marketplace model by spot, derivatives, OTC, and other product volumes. Apply fee rates and spreads by product, then deduct liquidity-provider incentives, technology, compliance, customer support, and marketing. Active traders, volume per trader, market share, fee compression, and regulatory restrictions should be visible scenario inputs rather than buried assumptions.

## What's included

- 5-year monthly revenue build with stage-appropriate growth assumptions
- Full P&L, headcount plan, and operating-expense schedule
- Cash-flow statement, runway, and burn-rate tracking
- Valuation via exit multiple with a DCF cross-check
- Returns analysis with MOIC and IRR
- Unit economics including CAC, LTV, payback, and cohort retention

## Product & value proposition

- Full-stack crypto infrastructure: order-book/matching engine, API connectivity, wallets, prime brokerage, clearing, custody, and execution.
- Instruments: futures (75% of revenue), spot (81 markets, 11 Layer-1s), leveraged tokens, OTC/RFQ, spot margin / P2P lending ($1.2B lent/borrowed on platform), tokenized stocks (via CM-Equity).
- Blockfolio acquisition: retail-facing mobile app being integrated as trading front-end to grow retail user base.
- Single cross-margin wallet across all products - key UX differentiator.
- 2021 expansion: options, sportsbook, prediction markets.

## Market

- No explicit TAM/SAM/SOM figures presented.
- Competitive context (proxy for market scale): top 3 exchanges each have $50B+ ADV.
- FTX ADV at time of deck: $14.7B vs. Binance $130.47B, Coinbase $13.14B.
- Crypto exchange volume growth Jan 2020–May 2021: FTX 75x, Binance 72.5x, Coinbase 49.6x - FTX fastest grower of major exchanges.

## Revenue model

- Primary: trading fees on volume (spot + derivatives). Futures = 75% of revenues.
- Secondary streams: OTC spread/commissions (OTC volume "growing steadily"); margin lending interest; leveraged-token management/rebalancing fees (listed on partner exchanges); tokenized-stock trading fees.
- No explicit fee schedule (bps/tier schedule) provided in deck.
- Revenue = effective fee rate × ADV × 365. Exchange take-rates typically 2–5 bps blended; implied from $1.2B ARR / ($14.7B ADV × 365) ≈ ~0.22 bps effective - unusually low, consistent with institutional/high-volume mix.

## Traction & metrics

- Annualized Run Rate (2021, approx. based on recent performance): **$1.2B**
- Average Daily Volume (2021): **$14.7B**
- Estimated Profit (annualized, 2021): **$800M** - implies ~67% profit margin on revenue run rate
- ADV at launch (early 2019): $50M from handful of users within first few months.
- ADV Jan 2020: $215M (starting); May 2021: $16.15B (75.2x growth).
- Annualized revenue run rate as of Jan 2021: $400M+.
- Spot margin P2P lending outstanding: $1.2B.
- Blockfolio DAU chart shows election-night spike (Nov 2020); ~$300M contracts traded on election night on prediction markets.
- Blockfolio Google Play reviews: Blockfolio itself had 122,560 reviews; Coinbase 284,534; FTX app (green star icon) 15,834 reviews; Robinhood 322,659.
- Team: 75 employees at time of deck.

## Unit economics

- Implied EBIT(DA) margin: ~67% ($800M profit / $1.2B ARR). - not explicitly labeled; likely pre-tax profit or operating income.
- No CAC, LTV, payback period, or cohort data provided.
- No explicit cost structure breakdown.

## Competition / moat

- Competitive set (by ADV): Binance $130.47B, Coinbase $13.14B, Kraken $3.68B, Huobi $53.3B, OkEx $45.98B, BitMex $3.73B, Bitfinex $2.07B.
- FTX's stated moat: fastest volume growth of all major exchanges (75x vs. Binance 72.5x from lower base); broadest product suite in single wallet; team pedigree (Jane Street, Google, Facebook/Libra, Goldman); proprietary OTC/API infrastructure.
- Compliance positioned as differentiator vs. unregulated peers.
- Blockfolio as retail distribution moat (vs. institutional-only model of early FTX).

## Team & funding ask / use of funds

- Sam Bankman-Fried (CEO): Jane Street ETF trader, MIT Physics.
- Gary Wang (CTO): Google engineer, MIT Math/CS.
- Nishad Singh (Head of Engineering): Facebook ML, Berkeley EECS summa cum laude.
- Dan Friedberg (General Counsel): Fenwick & West partner, Payment Systems chair.
- Ramnik Arora (Head of Product): Facebook Ads + Libra co-author, Goldman IM, IIT Kanpur / NYU / Stanford.
- Team of 75+.
- Prior context: implied prior capital raised to fund exchange build and Blockfolio acquisition.

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## Recommended financial model

**Archetype + why:** Exchange / marketplace revenue model (GMV-to-revenue) with P&L build-out.
FTX's economics are volume × take-rate → revenue → high-margin operating structure. The right model is an **Exchange Volume P&L**: forecast ADV by product segment, apply blended take-rates, build revenue, then layer in opex (headcount, infra, compliance, marketing) to arrive at EBITDA and free cash flow. A 3-statement model is worthwhile given the implied $800M profit base and likely fundraise context requiring a balance sheet (crypto assets held, custody obligations).

**Forecast horizon & granularity:** Monthly for Year 1 (2021), quarterly for Years 2–3 (2022–2023). Three-year horizon appropriate for growth-stage crypto exchange.

**Key drivers & assumptions:**

| Driver | Value | Source |
| -- | -- | -- |
| ADV - Futures (2021 base) | ~$11B (75% of $14.7B) | - |
| ADV - Spot (2021 base) | ~$3.7B (balance) | - |
| Blended effective take-rate | ~0.22 bps | back-solved from $1.2B ARR / ($14.7B × 365) |
| Futures take-rate (maker/taker blended) | ~0.02–0.05% | consistent with institutional exchange fee schedules |
| Spot take-rate | ~0.07–0.10% | typical spot exchange range |
| ADV growth rate - Base (YoY) | 40% Year 2, 30% Year 3 | deceleration from 75x bull run; crypto market maturation |
| Gross margin | ~90%+ | exchange software + infra costs low vs. revenue at this scale |
| EBITDA margin | ~65–70% | seed from $800M / $1.2B; modeled to compress slightly as headcount scales |
| Headcount growth | 75 → ~150 Year 2 | doubling to support retail expansion; typical for hyper-growth exchange |
| Avg. cost per head | $200K total comp | competitive tech/finance market |
| Blockfolio integration uplift (retail ADV) | +10–20% ADV uplift Year 1–2 | mobile app distribution benefit; no specific retail volume data in deck |
| Prediction markets / options revenue contribution | 5–10% of total revenue by Year 2 | nascent; deck shows early traction |
| Margin lending yield (on $1.2B lent) | 8–12% annualized | typical P2P crypto lending rates |
| Crypto market beta | High - modeled as a scenario variable | exchange volumes highly correlated with BTC/ETH price |

**Scenarios (Base / Bull / Bear - which variables flex):**
- **Bull:** Crypto bull market sustains; ADV grows 80%+ YoY; take-rate holds; EBITDA margin expands to 70%+.
- **Base:** ADV grows 40% Year 2, 30% Year 3; mild take-rate compression from competition; EBITDA margin ~65%.
- **Bear:** Crypto market correction (50%+ ADV decline); regulatory action in key markets; headcount costs fixed → margin compression to 30–40%.
- Key flex variables: ADV growth rate, blended take-rate (competition / volume-tier discounting), crypto market price level proxy (BTC price index).

**Required sheets / outputs:**
1. **Assumptions** - all drivers in one place, scenario toggles.
2. **Volume Model** - monthly ADV by segment (futures, spot, OTC, lending), blended take-rate, gross revenue.
3. **P&L (Income Statement)** - revenue, COGS (infra, payment processing), gross profit, opex (headcount, S&M, compliance, G&A), EBITDA, D&A, EBIT, taxes, net income.
4. **Headcount Plan** - by function, with ramp timing.
5. **Balance Sheet (simplified)** - cash, crypto assets held, customer liabilities, equity. Important given custodial nature of exchange.
6. **Cash Flow** - operating CF, capex (low), free cash flow.
7. **Valuation / Comparables tab** - exchange multiples (EV/Revenue, EV/EBITDA) referencing Coinbase (public comps as of 2021).
8. **Dashboard** - ADV vs. revenue, EBITDA margin bridge, scenario toggle summary.

## Frequently asked questions

### Is the FTX financial model free?

Yes. The FTX model is a free Excel download with live formulas.

### Can I change the assumptions?

Yes. The workbook is editable and its live formulas recalculate when assumptions change.