Jun 18, 2024 at 03:55Coinbase International has introduced a new feature allowing users to trade futures of tokens and coins that are yet to be listed on the exchange. This move aligns Coinbase with other centralized exchanges like Binance, Bybit, Bitget, and OKX, which have already created launchpads for emerging crypto projects.
Announced on June 17, Coinbase explained:
“Pre-launch markets allow users to trade perpetual futures contracts on tokens that have not launched yet.”
When the underlying token becomes available on relevant spot exchanges, these instruments will convert to standard perpetual contracts.
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The pre-launch market feature will be accessible to institutional investors through Coinbase International and to retail traders via Coinbase Advanced. Initial margin for pre-launch market assets is capped at 50%, or 2x leverage, with a notional position limit of $50,000 per token.
This instrument operates differently from traditional standard futures:
“Pre-launch markets use a different index price mechanism than standard perpetual futures, employing a 4-hour exponential moving average (EMA) of the instrument’s mark prices for the Pre-Launch Index Price.”
Coinbase cautioned that pre-launch markets carry higher risks due to lower liquidity, higher volatility, and increased liquidation risks. Additionally, pre-launch instruments are not included in the exchange’s Liquidity Support Program, which may lead to auto-liquidation risks.
There is also the possibility that some pre-launch tokens may never reach the full listing process. As Coinbase International explained,
“There is a risk — outside of Coinbase’s control — that the underlying token may never launch. If such a determination is made, the pre-launch market would not convert into a standard perpetual futures market and may need to be suspended or delisted.”
Coinbase International, launched in May 2023, serves as the overseas arm of the U.S.-based exchange. The platform operates under a Class F license from the Bermuda Monetary Authority.
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