TLDR
- Users can trade perpetual futures contracts on tokens before they launch on spot exchanges
- Initially only available to institutional investors on Coinbase International and retail traders on Coinbase Advanced
- Pre-launch markets use 4-hour exponential moving averages for pricing instead of spot prices
- Leverage is capped at 2x and position sizes at $50,000 notional value per token
- There is a risk that pre-launch tokens may never actually launch on spot exchanges
Coinbase International has unveiled a new “pre-launch market” that permits qualified traders to buy and sell perpetual futures contracts on cryptocurrencies before they are formally listed on spot exchanges.
This innovative offering from the overseas branch of major U.S. crypto exchange Coinbase is currently restricted to institutional investors using the Coinbase International platform and retail traders accessing Coinbase Advanced.
However, users located in the United States, Canada, and the United Kingdom are ineligible at this time.
In contrast to traditional perpetual futures whose prices derive from underlying spot markets, pre-launch market contracts employ a distinctive pricing methodology.
Their values are calculated using a 4-hour exponential moving average of recent mark prices for that specific instrument, diverging from the spot-based indices underpinning standard perpetual futures contracts.
We’re excited to announce support for pre-launch markets on Coinbase International Exchange and Coinbase Advanced. Trade new tokens before they launch and participate in price discovery, all within a trusted and secure platform. pic.twitter.com/rJ3eclyHDC
— Coinbase International Exchange 🛡️ (@CoinbaseIntExch) June 17, 2024
To mitigate risk exposure, Coinbase has imposed key limitations on these pre-launch markets. Leverage is capped at 2x, meaning traders’ maximum position size cannot exceed twice their collateral amount.
Additionally, a $50,000 notional cap per token restricts the maximum allowable position size.
Coinbase has acknowledged the “high-risk nature” of pre-launch markets, stating they are “more prone to lower liquidity, higher volatility and increased liquidation risk” compared to standard futures markets.
These pre-launch contracts lack the support of Coinbase’s Liquidity Support Program utilized for other futures pairs.
A significant risk emphasized by Coinbase is that tokens listed on the pre-launch market may never actually launch on live spot exchanges.
In such a scenario, Coinbase would be compelled to suspend or delist the pre-launch market contract, as it cannot be converted into a standard spot-margined perpetual futures contract.
The introduction of pre-launch markets enables Coinbase to facilitate speculative trading on forthcoming crypto projects ahead of their mainnet launches and spot listings.
This move aligns with similar pre-launch offerings recently introduced by other major exchanges like Binance, Bybit, Bitget, and OKX.
Coinbase’s first pre-launch market listing went live on June 17, 2024, although the company did not disclose which specific token was listed. More pre-launch listings are anticipated to follow over time as the exchange expands this new offering.
