🌎 Coinbase Introduces Pre-Launch Futures Trading for Unlaunched Tokens

Coinbase is introducing a new feature on its international and advanced exchanges, enabling users to trade futures contracts on tokens that have yet to be launched. This new functionality will allow traders to engage in “pre-launch markets,” facilitating the price discovery of upcoming projects directly within the Coinbase platform. Eligible traders can open long or short positions on unlaunched tokens with up to 2x leverage, which could potentially result in significant returns.

Users will have the ability to buy and sell tokens before their official launch, even if the token’s launch date has not been announced. Institutional users must use the Coinbase International Exchange to participate in these pre-launch markets, while eligible retail traders can access them through Coinbase Advanced.

Pre-Launch Markets

Pre-launch markets enable traders to trade perpetual futures contracts for tokens that have not yet been launched. Once a project or the underlying token is launched on relevant spot exchanges, these contracts will transition into standard perpetual futures contracts on Coinbase.

Pre-launch markets are distinct from standard perpetual futures markets, presenting unique considerations and elevated risks. It is important to exercise caution and avoid trading contracts unless you fully understand the associated risks.

In futures trading, two parties agree to buy or sell a commodity, security, or asset at an agreed price and date in the future. These contracts are legally binding and are traded electronically on exchanges, such as Coinbase.

Risks of Options Trading in Pre-Launch Markets

Users will trade these futures contracts for tokens that are not yet available. The risk that the underlying token may never be launched is beyond Coinbase’s control. Additionally, Coinbase may remove the tokens after they have officially launched.

Please note that positions for pre-launch markets will not be assigned to participants of our Liquidity Support Program (LSP). As such, these markets will be at higher risk of Auto-Deleveraging compared to standard perpetual futures.

If this occurs, the pre-launch market may not transition into a standard futures market and may need to be suspended or removed from the platform. Coinbase also reserves the right to temporarily or permanently suspend trading or remove markets from its platform at any time, which introduces significant risk for traders.

Essentially, traders can “place bets” on token projects that might never launch or be accepted by Coinbase. Given the high-risk nature of pre-launch markets, these markets are more susceptible to lower liquidity, higher volatility, and increased liquidation risk.

Coinbase Parameters

Coinbase has implemented strict limits on leverage, positions, and open interest for these markets. Pre-launch markets will have the following characteristics: an initial margin of 50% (Max 2x Leverage) and a position limit size of $50K notional instrument limit.