FTX to eliminate high leverage, up to 20x, starting today, founder SBF: "We are taking the first step ahead of the industry"
The cryptocurrency exchange FTX announced the cancellation of high leverage and reduced the limit to 20x, with founder and CEO SBF explaining the decision.
SBF stated that an efficient margin system can be integrated into an efficient economic system, but everything has its limits.
He explained, "We have put a lot of effort into the margin system on FTX, allowing users to use a hybrid margin of the most assets on the platform. This means you only need to manage one wallet instead of hundreds, while also significantly reducing the occurrence of liquidation. Refer to: https://www.bybt.com/LiquidationData
Advertisement - Please scroll down for more content
He felt that part of the reason for doing this is to encourage responsible trading by users. FTX's products and margin system are designed to attract specialized traders.
SBF mentioned that they avoid punitive rules and liquidations on FTX start from regular trades without additional losses.
1) An effective margin system is integral to an efficient economic system.
There are limits to everything, though.
— SBF (@SBF_FTX) July 25, 2021
Table of Contents
The Story Behind High Leverage
SBF stated that there has been a lot of discussion recently about high leverage, exceeding 20 times leverage. He said:
"Almost all cryptocurrency derivative exchanges offer high leverage, but almost every one of them will say the same thing: in reality, the trading volume with high leverage is minimal."
SBF said, "For us, the liquidation volume is less than 1% of our trading volume and positions, it is not a significant part of this exchange at all." He continued to say that liquidation is not the source of price volatility on the FTX exchange, but it is for some other exchanges.
He mentioned that the average leverage used by users on FTX is less than two times. Therefore, he believes that arguing about high leverage is missing the point and is not a significant part of the crypto ecosystem, and in some cases, it is unhealthy.
Leading the Way by Removing High Leverage, Up to 20 Times
SBF stated that after careful consideration, FTX will take the lead in the industry.
"Today, we are removing high leverage from FTX, with a maximum of only 20 times."
He believes that although many users have expressed their desire for choices, in reality, very few people are using it, so FTX has decided to move forward. He also mentioned that there will be many new features and updates in the future.