Eligible traders have the opportunity to open long or short positions on an unlaunched token with up to 2x leverage, which can potentially result in high returns. This allows users to buy and sell a token before its upcoming launch, even if the launch date hasn’t been released yet. Institutional users are required to use Coinbase International Exchange to participate in these pre-launch markets. On the other hand, eligible retail traders can access them through Coinbase Advanced.
Once a project or underlying token is launched on relevant spot exchanges, these contracts transition into standard perpetual futures contracts on Coinbase. These contracts are legally binding and are traded electronically on exchanges, specifically Coinbase. However, Coinbase may remove the tokens after they have officially been launched, and these markets are at higher risk of Auto-Deleveraging compared to standard perpetual futures. In the event of Auto-Deleveraging, the pre-launch market may not be able to transition into a standard futures market and may need to be suspended or removed from the platform.
Traders essentially can “place bets” on token projects that may never launch or be accepted by Coinbase. Given the high-risk nature of pre-launch markets, they are more prone to lower liquidity, higher volatility, and increased liquidation risk. Pre-launch markets are characterized by an initial margin of 50% (Max 2x Leverage) and a position limit size of $50K notional instrument limit. Coinbase emphasizes the importance of exercising caution and refraining from trading contracts that traders are unfamiliar with or do not fully understand the associated risks.