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- Coinbase announces that it is supporting pre-launch markets on its International and Advanced platforms, and will be available for all users in eligible countries outside the UK, US, and Canada.
- According to the official announcement, the markets would be outside the control of Coinbase, however, it reserves the right to temporarily or permanently suspend or delist a token.
Coinbase has officially announced that it would support pre-launch markets on its Coinbase International Exchange and Coinbase Advanced. This implies that users would have the luxury to trade new tokens before their official launch or release to the general public.
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
Concerning the parameters of this market, Coinbase pledges that there would be strict leverage, position limits, and open interest caps on the markets. For now, the Initial Margin is capped at 50% with the Position Limit Size fixed at a $50K notional instrument limit. Also, the market can only be traded in portfolios that are enabled for pre-launch trading with instruments in “PRE_LAUNCH” mode subject to be traded in portfolios enabled in pre-launch trading.
Pre-launch markets allow users to trade perpetual futures contracts on tokens that have not launched yet. When the underlying token is launched on applicable spot exchanges, the instrument converts to a standard perpetual contract. Pre-launch markets on Coinbase allow users to participate in price discovery for upcoming projects on a trusted and secure platform.
According to Coinbase, the pre-launch market is currently available to users living in eligible countries outside the US, UK, and Canada.
More on the Pre-Launch Markets by Coinbase
Explaining this newly introduced market, Coinbase clarified that the pre-launch markets differ from standard perpetual futures markets. According to their blog post, the former possesses unique considerations and elevated risk and must be treated with caution. With this, it is worth noting that it has a different index price mechanism than standard perpetual futures. Also, it uses the 4-hour exponential moving average (EMA) of the marked price of the instrument for the Pre-Launch Index Price.
Noteworthy, positions of pre-launch trading are not linked or assigned to the Liquidity Support Program (LSP) and, henceforth, would be at higher risk of Auto-Deleveraging compared to the standard perpetual futures. On top of that, the markets could be prone to lower liquidity, higher volatility, and increased liquidation risk as stated by Coinbase.
Our review of this subject discloses that the pre-launch market would be outside the control of Coinbase. In this case, the underlying token may never be launched. In addition, the exchange at its discretion may temporarily or permanently suspend trading and delist the token from its platform at any time. On the other side, Coinbase may convert the pre-launch market to a standard perpetual future once the underlying asset is launched on any applicable spot exchange and meets its requirements.
Outside of Coinbase’s control — the underlying token may never launch. If such a determination was made, the pre-launch market would not be able to convert into a standard perpetual futures market, and the market may need to be suspended and/or delisted.
According to the exchange, the pricing of the market would be strictly determined by the interaction of demand and supply by traders. Fascinatingly, this exciting news comes soon after Crypto News Flash reported that Coinbase has introduced perpetual futures contracts for Shiba Inu, Floki, and Bonk. To them, these are significant steps towards the expansion of the platform to the reach of a wider audience.
