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Coinbase International is following in the footsteps of centralized exchanges such as Binance, Bybit, Bitget, and OKX by creating a launchpad for emerging crypto projects.
On June 17, Coinbase revealed its new feature: “Pre-launch markets allow users to trade perpetual futures contracts on tokens that have not launched yet,” adding, “When the underlying token is launched on applicable spot exchanges, the instrument converts to a standard perpetual contract.”
This feature will be available to institutional investors through Coinbase International and to retail traders via Coinbase Advanced. Pre-launch market assets have an initial margin cap of 50%, or 2x leverage, and a notional position limit of $50,000 per token.
Unlike traditional standard futures, “Pre-launch markets have a different index price mechanism than standard perpetual futures and use a 4-hour exponential moving average (EMA) of the instrument’s mark prices for the Pre-Launch Index Price.”
Coinbase also warned about the high-risk nature of pre-launch markets, stating that they “are more prone to lower liquidity, higher volatility and increased liquidation risk.” Additionally, pre-launch instruments are not supported by the exchange’s Liquidity Support Program, which increases the risk of auto-liquidation.
There is also the possibility that pre-launch tokens may never make it to the full listing process. Coinbase International explained, “There is a risk — outside of Coinbase’s control — that 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.”
Launched in May 2023, Coinbase International is the overseas arm of the U.S.-based exchange. The platform holds a Class F license from the Bermuda Monetary Authority, enabling it to operate in a regulatory-friendly environment and offer innovative products like the pre-launch markets.
Coinbase’s new feature aims to provide institutional and advanced retail traders with early access to promising crypto projects, despite the inherent risks.