Coinbase has made an official announcement regarding the support for pre-launch markets on its Coinbase International Exchange and Coinbase Advanced platforms. This means that users will now have the opportunity to trade new tokens before they are officially launched to the public.
In a recent tweet, Coinbase International Exchange shared their excitement about this new development. They stated that users can participate in price discovery and trade new tokens before their official launch on a secure and trusted platform.
Coinbase has set strict parameters for these pre-launch markets, including leverage limits, position limits, and open interest caps. Currently, the Initial Margin is capped at 50% and the Position Limit Size is set at a $50K notional instrument limit. Users can only trade in portfolios enabled for pre-launch trading with instruments in “PRE_LAUNCH” mode.
Pre-launch markets allow users to trade perpetual futures contracts for tokens that have not yet launched. Once the underlying token is launched on spot exchanges, the instrument will convert to a standard perpetual contract. These markets provide an opportunity for users to discover prices for upcoming projects on a secure platform.
The pre-launch market is currently available to users in eligible countries outside of the US, UK, and Canada. Coinbase has emphasized that these markets come with unique considerations and elevated risks, and should be approached with caution. The index price mechanism for pre-launch markets differs from standard perpetual futures, using the 4-hour exponential moving average (EMA) of the marked price.
It is important to note that positions in pre-launch trading are not part of the Liquidity Support Program (LSP) and are at a higher risk of Auto-Deleveraging compared to standard perpetual futures. These markets may also experience lower liquidity, higher volatility, and increased liquidation risk.
The pre-launch market is not under the control of Coinbase, and the underlying token may never launch. Coinbase reserves the right to suspend or delist tokens from the platform at any time. However, they may convert the pre-launch market to a standard perpetual future once the underlying asset is launched on spot exchanges and meets their criteria.
The pricing of the market will be determined by the demand and supply interaction between traders. This exciting news follows the recent introduction of perpetual futures contracts for Shiba Inu, Floki, and Bonk by Coinbase, indicating steps towards expanding the platform to a wider audience.