FTX Exchange

FTX is a Bahamian cryptocurrency exchange. FTX is incorporated in Antigua and Barbuda and headquartered in The Bahamas. As of February 2022, the exchange has over one million users. FTX operates FTX.US, a separate exchange available to US residents.

Alameda Research

Alameda Research Ventures (ARV) is a multi-stage crypto and fintech investment firm with a mission to take a pragmatic, real-world oriented approach to finance - making it more accessible for all.

Sam Bankman-Fried (SBF)

Sam Bankman-Fried, also known by his initials SBF, is an American entrepreneur and one of the richest people in crypto thanks to his FTX exchange and Alameda Research trading firm. He is CEO and Founder of FTX and also Alameda Research. The son of two Stanford law professors, he studied physics at MIT but was drawn to "effective altruism," the utilitarian-inflected notion of doing the best possible.

What is The Story ?

In the past few days, after a report from CoinDesk about the strange financial balance sheet of Alameda was published, we have seen some important events and some have sounded the alarm that Alameda and even FTX exchange can shock the market with its bankruptcy. Now I am going to briefly review these events:

• CoinDesk report publication: Alameda's financial statement shows that the company's assets are 14.6 billion dollars, the highest amount of which is 3.66 billion dollars of FTT token (the native token of the FTX exchange) which is unlocked. But the main point is that the source of the company's 8 billion dollar loan has not been determined, and it is also not known how much of it is without support.
• Sam Bankman-Friend response: After many criticisms following the publication of this report, finally, SBF, the CEO of FTX, was forced to respond and claimed that this company has more than 10 billion dollars of capital not mentioned in this report. But it still did not specify how much of Alameda's loans were made through FTX.
• Sale of FTT by Binance: Binance CEO Changpeng Zhao also confirmed the rumors about the sale of FTT token by this exchange, and said that this action was aimed at reducing the risk of the assets of this exchange. In response, SBF trivialized this decision and said that FTX is ready to buy all Binance’s FTT tokens. CZ stated that he will sell the remaining FTT token holding. He added that this move is a part of his exit plan from FTX.
• Liquidity problem: Following the spread of this news, withdrawals from the FTX exchange have intensified, and Alameda has been forced to transfer assets from his accounts in other exchanges to the FTX exchange in order to provide the necessary liquidity.
• Huge capital outflow: To understand the dimensions, it is enough to mention that the FTX exchange's Ethereum balance has decreased by 300 thousand in the past 48 hours!

Looks like FTT players are selling this token heavily!

Where is the hidden point of the story? The FTX exchange creates its multi-billion dollar token from scratch. It brings a segment into the cycle that Binance and competing exchanges buy. Puts a part in Alameda as collateral to get a dollar loan; Magic trick !

Since yesterday, a large amount of this token has entered Binance and the sales pressure has increased so much that this price drop increases the possibility of liquidating loans with FTT collateral. Unless the FTX exchange starts buying. These tricks will ultimately harm the people who have put their small capital on this token.

Binance Moves to Liquidate FTX Token Holdings

While the famous CZ did not state how much FTT will be sold, it’s known that Binance received roughly $2.1 billion worth of BUSD and FTT as part of its FTX exit last year.

SBF tweeted at Zhao and proposed a buyout at $22 per token as a way not to greatly impact the markets.

When it comes to money movements, a $583 million transfer (in FTT) has moved to a Binance exchange wallet over the weekend.

Numerous sources state that FTX’s books are not as good as they seem, and that they might hold too many illiquid assets that might trigger a domino effect if one thing goes wrong.

In the last 72 hours, the Cryptocurrency market has been accompanied by a heavy price crash. This price crash is so similar to the Terra Collapse days and LUNA crashon May 2022.

The biggest price correction is related to the FTT token.

FTT token has decreased in price by more than 90% at the time of this writing! its price has decreased to $2, Almost the equal price of its launch time !!!

Due to the severe liquidity problems of the FTX, this exchange starts to sell supporting currencies such as (WBTC, ETH...) in order to prevent further loss of its own token FTT, and this has increased the selling pressure in the market...

Another token that has experienced massive crash on its value was SOL because of Alameda and FTX investments on this token and its ecosystem. SOL price has been decreased from $35 to $12 only in 2 days.

So, It seems Statr Xu Star Xu (OKX Exchange Founder) prediction is about to come true since the FTX is becoming another LUNA ! ==>

Binance has announced the full acquisition of the FTX exchange ==>

After the events of the past few days and especially yesterday, the users also panics and has a strong fear of having the FTX exchange face the bank run phenomenon (when a large number of customers They want their assets and want to take them out of the platform). As a result, FTX is moving to the limit of emptying liquid assets (quick liquidity). The managers of FTX are trying to get help from Binance to save them, for now, CZ has given the initial agreement and the market has reacted positively (just for a while) to this initial agreement but it did not finalize.

After the first agreement of FTX and BNB, which is not binding for Binance, Binance undertakes to pay all the assets of the users of the FTX exchange, and in return this exchange is sold to Binance. With the announcement of this news, the cryptocurrency market was in a big shock because before the announcement of this news, SBF and CZ were fiercely fighting each other, and CZ had dealt a big blow to FTX by announcing the sale of Binance's FTT tokens. After announcing this news, the FTT token rose to $21.

15-minute celebration! while everything seemed to calm down the market and even the token of the Binance exchange BNB jumped by 23% to the $400 mark! But with the negative reaction of the activists to this action of Binance, as well as comments from the legislators that this agreement is illegal based on the antitrust principle that prohibits big competitors from supporting each other, the market fell more strongly than before! Bitcoin fell to $17,000 and FTT token fell to $2.

because of the important role of FTX in the Cryptocurrency market, including investment in numerous projects and also a significant asset of various tokens, including Solana (SOL), we had to wait and see the role of this exchange and the agreement What will it look like with the Binance exchange? If the FTX exchange cannot somehow find a way to pay its obligations, it seems that we have to wait for another domino of bankruptcy in the world of Cryptocurrencies!

Death of FTX and FTT ?!

seems Binance is not going to buy FTX and CZ also advise traders to do not trade FTT token. After this announcement, FTT token’s price has fell down again and seems FTX and Sam Bankman-Fried are in a such a huge problem.

Will FTX Survive?

With the worsening situation of this exchange and also the investment company Alameda Research, the question that is being raised is whether FTX will manage to survive this disaster.

Full-scale war between Binance and FTX: Right after Binance announced the sale of FTT tokens, the attack on this exchange increased. As the war between Binance CEO CZ and FTX CEO SBF worsens, many have pointed to the fight between the two since 2021. The interesting thing is that according to published information, a significant inflow to the Binance exchange in the last seven days was from the FTX exchange! This means that FTX users are withdrawing their money from this exchange and entering it into Binance.

FTX assets: The more important question is whether FTX assets are the answer to this crisis or not. To accurately understand this issue, we must have clear information about the assets of this exchange, which unfortunately was not provided by the team, and in the case when CoinDesk published Alameda's balance sheet, this information was read by the team as incomplete, and incorrect. However, perhaps the only information available is the balance in the exchange, for example, the Ethereum balance of this exchange has decreased by 80% in the last 7 days! Regarding the bitcoin assets of this exchange, the conditions are more or less the same and currently its bitcoin balance is reported to be 6,000. (For comparison, this number is 600,000 bitcoins for the Binance exchange!)

Methodology

In this dashboard and on the occasion of this crisis, I am going to check how this tumult surrounding FTX and Alameda impacted SOL and the Solana ecosystem.

For this purpose, Firstly, I am going to check SOL and all other Solana token transfers to Alameda and FTX Wallets and also Centralized Exchange (CEXs) except FTX

Then, I am going to analyze swap activity on Solana during this timespan and especially for SOL, SRM, and GMT tokens which were listed among assets that FTX and Alameda invested in them.

Then, I am going to analyze Solana <=> Ethereum bridge activity via Wormhole during recent days,

Since the coindesk article was published on 2nd November and all above story was going to begin on this day, I am going to analyse data mainly since 2nd November till today, Considering that heavy market price crash has official began on 7th November.

According to the above data, Since 2nd November, the total net flow of all Solana tokens and also SOL, is quite negative with high volume.

This means, the majority of tokens are being transfered out of FTX and Alameda wallets with a high volume.

Also in CEXs (except FTX), we can see the total net flow of SOL and all other Solana tokens is negative and this mean the majority of tokens are being transfered out of CEXs to the Solana ecosystem.

Based on the above charts, the majority of assets were transfered out of FTX on 7th November (one day before market heavy price crash). Also, we can see there is not any data after 8th November on FTX and Alameda wallets and this means seems these platforms has limited the depositos and withdrawals.

About CEXs, we can also see the highest spike of outflow volume from these platforms on 7th November. After and before these dates we can see way less activity of both deposits and withdrawals to CEXs compared to the 7th and 8th November. Also, we can see there is very low (near zero!) out and inflow after 8th November to and from Solana.

In terms of SOL, we can see the majority of inflow and outflow of this token has achieved on 8th November (1 day delay after high withdrawals of other tokens).

After and before these days, we can see way less activity of SOL deposits and withdrawal to/from CEXs.

Based on the left charts, we can see that most number of both inflow and outflow of Solana tokens from/to CEXs were done with $100 - $1000 volume.

In terms of SOL token, we can see the majority of deposits and withdrawal to the CEXs were done with 1 - 10 SOL volume. But, the share of high-volume transfers (more than 100 SOL) on outflows is more than inflows.

maybe we can conclude "Whales" just bought tokens on low prices and outflowed them to their wallets with high volume.

On the above charts, as we have seen earlier on the previous charts, the most inflow to CEXs has achieved on 5th November and the highest ouflows achieved on 7th November.

Moreover, as time goes on, we can see increasing share of inflows with low volume ($100 $1000) to the CEXs. This means that mainly regular users are transfering their assets to the CEXs not whales.

In terms of outflows, we can see decreasing share of outgoing transfers with more than $10000 volume from CEXs and on the other hand, increasing share of withdrawals with $100 - $1000 volume.

for SOL Inflows to the CEXs, we can see quite increasing share of deposits with 10 - 100 and more than 100 SOL as time goes on and on the other hand, decreasing share of deposits with 1 - 10 SOL and less than 1 SOL.

but for SOL Outflows from CEXs, we can see quite decreasing share of withdrawals with less than 1 SOL over time.

Based on the above charts, Coinbase exchange, has the highest share of Outflows destinations from FTX and Alameda wallets in both terms of number and volume of withdrawals.

Moreover, in terms of volume, we can see Gate.io had high share till 5th November, but as time goes on and when the crisis was about to begin, Kraken and Coinbase took the lead and are now by far the most popular destinations of Withdrawals.

According to the above charts, USDC is by far the most withdrawed assets from FTX & Alameda wallets to the Solana ecosystem. Also, the majority of transfers from other CEXs to the Solana ecosystem belong to the USDC. (charts are logarithmic so difference between volume are so higher that what u see). the next ranks belong to the USDT and SOL tokens.

In terms of inflows, we can also see USDC is the most deposited asset to the Alameda, FTX and also other CEXs. in here too, USDT and SOL are on the next ranks.

Swaps Activity

Trasnfers Flow To/From FTX, Alameda and CEXs Wallets

On this part, As mentioned above, CEXs are all centralized exchanges except FTX.

Firstly on the left chart, we can see SOL, GMT and SRM price over time. As we see, After 6th November the price of all 3 tokens have decreased dramatically.

I have extracted the list of assets which SBF, FTX and Alameda Research have invested in them (the right image).

As we see, SOL is the first rank of this list with more than 7.69B USD and we have also SRM (176M USD) and GMT (283M USD) on this ranking.

So, I am going to analyse swaps activity of these tokens on the Solana ecosystem during the FTX & Alameda Collapse.

Also on the above charts, we can see the swap activity on Solana ecosystem (all assets). as we see, the number and volume of swaps increased dramatically on after 7th November.

Based on the above charts, we can see the huge increasing activity of swaps to and from SOL token to other assets since 8th November. highest number of SOL swaps achieved on 8th November but the number of swappers and also volume of swaps on 9th November is more than other days. In addition, we can see quite increasing trend of average SOL Swaps volume as time goes on to the extent that on 10th November, we can see highest spike of average SOL swaps volume.

Moreover, we can see as time goes on , the number of swaps from SOL to other tokens is increasing dramatically. but the difference between volume of swaps from SOL & volume of swaps to SOL is less than the swaps count (Swaps from Volume have more volume in almost all days).

On the left chart, we can see as time goes on, the number of swaps with less than 10 SOL volume is increasing in both swap from and to SOL.

Based on the above charts,similar to the SOL token, we can also see the huge increasing activity of swaps to and from SRM token to other assets since 8th November. highest number of SRM swaps and swappers achieved on 9th November but the volume of swaps on 10th November is more than other days. In addition, we can see quite increasing trend of average SRM Swaps volume as time goes on to the extent that on 10th November, we can see highest spike of average SRM swaps volume.

As time goes on, the share of swaps from SRM is decreasing and the share of swaps to SRM is increasing over time.

On the left charts, we can see increasing share of swaps with more than 1000 SRM volume as time goes on.

SOL

SRM

GMT

Based on the above charts, similar to the SOL and SRM tokens, we can also see the huge increasing activity of swaps to and from GMT token to other assets since 8th November. highest number of GMT swaps and swappers achieved on 8th November but the volume of swaps on 9th November is more than other days. In addition, we can see the average volume of GTM swaps on 9th November is more than other days.

Aso, we can see totally the number and volume of swaps to GMT is more than swaps from GMT. but we can see a spike on 9th November that swap from GMT caused that.

On the left chart, we do not see any specific trend of a volume-type swap on GMT over time.

Cross-Chain Bridge Activity

On the left chart, we can see increasing activity of Ethereum to Solana on 9th November with a high spike of 35.396M USD volume.

The average volume of bridges from Ethereum to Solana has increased significantly on these days.

But, the volume of bridges is way less than bridges from Solana to Ethereum (below charts)

According to the left charts, we can see a significant increasing share of USDC bridges from Ethereum to Solana after 2nd November.

And similar to the previous chart, we can see also quite increasing share of USDC bridges from Solana to Ehtereum after 2nd November especially on 9th November that almost more than 97% of all bridges belong to this asset !

Summary and Conclusion

• The total net flow to/from CEXs (and ofcourse FTX and Alameda) during the timespan of the analysis is negative. this negative amount is for all tokens including SOL.
• The majority of outflow from Alameda, FTX and other CEXs to the Solana ecosystem has occurred on 7th November. But, the most volume of SOL was withdrawed from CEXs on 8th November. This 1 day delay may be because users just realized that SOL token can be affected by this crisis too !
• The average volume of Outflows from CEXs is more than Inflows (for SOL and all other tokens). This can be concluded "Whales" just bought tokens on low prices and outflowed them to their wallets with high volume.
• As time goes on, more high-worthy withdrawals are being done from CEXs.
• Coinbase and Kraken are the most 2 popular destinations of withdrawals from FTX and Alameda.
• USDC, USDT and SOL are the most deposited/withdrawn assets from/to Alameda, FTX and CEXs to/from Solana ecosystem. but USDC difference is way more than other assets.
• SOL, SRM and GMT tokens are the top 3 Solana ecosystem assets that Alameda and FTX have invested on them. all 3 experienced massive crash on their price during collapse days.
• Solana ecosystem swap activity increased dramatically after 7th November in both number and volume.
• SOL,SRM and GMT tokens swap activity is also increasing in both number and volume (especially number) and average volume. As time goes on , the share of Swaps From SOL is getting more than swaps to SOL. (especially in terms of swaps count). But the share of swaps to SRM is getting more than swaps from SRM. Also in almost all days, the share of swaps to GMT is more than swaps from GMT.
• The number and volume of bridges from Solana to Ethereum has increased dramatically since 2nd November. USDC is the most bridged asset from Solana to Ethereum. maybe this means users have lost their trust in Solana and tend to bridge their asset to a safer blockchain

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On the above charts, we can also see quite increasing number and volume of bridges from Solana to the Ethereum since 7th November. Maybe this can be users have lost their trust on Solana and tend to bridge their assets to a more safe blockchain like Ethereum.