Coinbase International has announced support for the pre-launch market

Coinbase International is following in the footsteps of centralized exchanges such as Binance, Bybit, Bitget and OKX to create a launching pad for up and coming crypto projects.

“Pre-launch markets allow users to exchange perpetual futures contracts on tokens that have not yet launched,” Coinbase explained on June 17, adding: “When the underlying token is launched on the respective spot exchanges, the instrument will convert to a standard perpetual contract.”

The feature is available to institutional investors through Coinbase International and retail traders through Coinbase Advanced. Pre-launch market assets are held with an initial margin of 50% or 2x leverage and a notional position limit of $50,000 per token.

The tool works differently than traditional standard futures.

“Pre-start markets have a different index pricing mechanism than standard perpetual futures and use the 4-hour moving average (EMA) of the instrument's markup to price the pre-start index.”

Coinbase also warned that “given the high risk of pre-launch markets, these markets are vulnerable to the risk of low liquidity, volatility and increased liquidity.” Additionally, pre-launch instruments are not supported by the exchange's liquidity support program, which poses additional risks to auto-liquidation.

Coinbase International explained that there is also a possibility that pre-launch tokens may not go through the full listing process:

“Without Coinbase's control – there is a risk that the original token will never launch. If such a decision is made, the pre-launch market cannot be converted into a regular perpetual futures market, and the market may need to be suspended and/or canceled.

Launched in May 2023, Coinbase International is the foreign arm of the United States-based exchange. The platform holds a Class F license from the Bermuda Monetary Authority.

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