Pre-market contracts: Kill or boost token launches?

What impact does the pre-market have on token launches?

Written by: KarenZ, Foresight News

Pre-market trading and pre-market contracts have gradually become important components of token launches.

This mechanism, provided by third-party trading platforms before the official launch of a token, offers trading channels that release market price signals in advance and attract investor attention. It not only changes the timeline for price discovery but also affects the initial performance of the token after its official launch.

This article will systematically outline the evolution of the pre-market and explore its impact and challenges on token launch strategies.

What is the pre-market? How does it operate?

The pre-market refers to the early trading environment provided by third-party trading platforms before a token officially goes live. Such trading often relies on futures contracts or token subscription rights, simulating real market behavior to achieve price discovery, test market sentiment, and provide early investors with opportunities for speculation or risk hedging.

Recently, the pre-market contract market has been particularly noteworthy, allowing users to speculate on prices before the token goes live.

Different platforms have varying pricing mechanisms. For example, Binance's recently launched pre-market contracts use a dynamic marking price, taking the average trading price from the past 10 or 20 seconds and updating it every second. To curb abnormal fluctuations, the marking price change is limited to ±1% per second. If there are fewer than 41 transactions within 20 seconds, the average of the most recent 40 transaction prices is used to enhance resistance to manipulation.

On the other hand, the decentralized derivatives exchange HyperLiquid's "Hyperp" contract initially attempted to use a pricing mechanism that does not require external oracles, anchoring the funding rate to its own marking price based on an 8-hour EMA. However, after experiencing extreme market conditions with the XPL contract, team members indicated they would introduce external pre-market contract price data and adopt a hybrid pricing model to enhance robustness.

The evolution of the pre-market

In the early days of cryptocurrency, the so-called "pre-market" was almost non-existent or extremely immature, primarily consisting of very limited OTC trading. Early angel investors, advisors, or team members of projects might privately transfer their equity or future token commitments, but such transactions:

Were limited to tight-knit, trust-based circles.
Each transaction was individually negotiated, with no unified price discovery mechanism.
Had extremely poor liquidity: it was difficult to match buyers and sellers.

Later, as numerous projects sought funding, the listing of tokens on exchanges often faced delays of several months or even a year. During this period, the enormous speculative demand led to the emergence of the pre-market trading market. Some centralized exchanges introduced "IOU" (I Owe You) tokens, representing a claim to future tokens.

Subsequently, there were OTC DEXs like Whales Market that supported over-the-counter trading, pre-market token markets, and points markets. These pre-market trading markets had shallow depth and were easily manipulated by "whales," resulting in high volatility.

As the issues of the previous phase were exposed and the market further developed, dominance began to shift towards large centralized exchanges and Hyperliquid. Since the second half of last year, these exchanges have attempted to "standardize" pre-market trading and incorporate it into their ecosystems. For instance, Binance allows users to pre-purchase tokens at a fixed price through new coin mining, followed by pre-market trading, creating a combined product and a certain degree of "controllable" pre-market.

In the pre-market trading provided by Bitget, buyers and sellers can establish orders in advance and execute trades as needed, completing the settlement afterward. In this case, sellers do not need to hold any new tokens in advance; they only need to acquire enough new tokens for settlement before the designated settlement time.

Since the beginning of this year, pre-market trading has gradually taken the form of perpetual contracts, with trading activities increasingly concentrated on such contract products. Mainstream exchanges like Binance, Bitget, Bybit, and OKX have pre-market contracts that provide price discovery functions while effectively managing market risk through measures such as maximum leverage limits, multi-tier margin mechanisms, and price fluctuation ranges. Additionally, HyperLiquid's "Hyperp" pre-market contracts have also shown active performance, with significant increases in market attention and trading volume.

From the early simple IOU certificates to today's complex pre-market perpetual contracts, the evolution of the pre-market reflects the market's growing demand for liquidity, speculative efficiency, and risk management.

The impact of the pre-market on token launches

The pre-market / pre-market contracts have changed the gameplay and logic of token launches, with multifaceted impacts, serving as a true double-edged sword.

Overall, it has transformed token launches from a "momentary event" into a "continuous process," bringing price discovery forward from the moment the token goes live.

Positive impacts

1. Preceding price discovery mechanism

Traditional model: Before a token goes live, the price is a black box. The opening price is "guessed" by the project team and the exchange based on private placement prices and market sentiment, which can lead to significant deviations (such as opening below the issue price or experiencing sudden spikes or drops).
The pre-market / contracts create a continuously changing, market-driven expected price through ongoing market trading. This provides price references for project teams, exchanges, and communities, helping to set a more reasonable and market-accepted spot opening price, while also smoothing out volatility at launch.

2. Strong market preheating and consensus building

Pre-market trading can maintain sustained attention for weeks or even months, prompting traders and KOLs to delve into the project's fundamentals, token economics, and team background to make trading decisions.
This sustained attention serves as long-term, free market education for the token's launch, attracting a broader user base at the time of launch, rather than just those who were "lying in wait" from the beginning.

3. Providing risk hedging tools for early supporters

Early private investors, advisors, and team members often hold a large number of tokens with lock-up periods (Vesting). They face the risk of the token's price falling below their cost after unlocking.
Pre-market contracts allow them to hedge this downside risk before the token goes live, locking in profits.

4. Attracting attention from market makers and institutions

Active pre-market trading volume and high attention are proof of a project's potential. Professional market makers and institutional investors are thus attracted and more willing to provide post-listing liquidity services for the project, which is crucial for the long-term healthy trading of the token.

Negative impacts and challenges

1. "Expectation realization" and lackluster launch performance (the core risk)

If the pre-market price is overly hyped, forming an inflated expected price, then when the token actually launches, the classic operation of "buying the expectation, selling the fact" may occur, severely undermining market confidence.
Taking WLFI as an example, on September 1, 2025, WLFI (the token of the Trump family project World Liberty Financial) officially launched. The WLFI pre-market began trading weeks before the launch, with prices significantly rising due to speculative capital. However, after the token launched, the price quickly fell back. Even with support from multiple platforms like Binance, Upbit, and Coinbase, the price still lacked upward momentum, indicating that speculative demand had been overly exhausted in the pre-market.

2. Insufficient liquidity and prevalence of price manipulation

The pre-market contract market typically suffers from insufficient liquidity in its early stages. This means that "whales" or "arbitrageurs" can manipulate contract prices with relatively small amounts of capital, creating false FOMO or FUD signals.
Manipulated price signals can mislead the entire market and may cause retail investors to blindly chase or sell. The extreme market conditions of Hyperliquid XPL on August 25 serve as a typical case of pre-market manipulation.

3. Systemic risk

The extreme conditions of Hyperliquid XPL also exposed weaknesses in risk control, oracle mechanisms, and position management in pre-market contracts.

4. Weakened pricing power of project teams

In the traditional model, project teams and market makers have significant control over the opening price. Now, this power has been partially ceded to the pre-market, which may be dominated by short-term speculative behavior, placing greater pressure on project teams to manage market expectations.

Fundamental changes to token launch strategies

Although current pre-market trading still faces issues such as thin liquidity, expectation realization, and price manipulation, its positive roles in price discovery, risk management, and market efficiency cannot be overlooked.

In the face of the irreversible trend of pre-market influence, project teams need to continuously optimize their launch strategies:

Transitioning from "token launch" to "launch management": Project teams no longer focus solely on the day of listing. They must actively guide positive sentiment through product progress updates, partnerships, exchange announcements, and transparent token economics to counter potential manipulation and FUD, thereby stabilizing market expectations throughout the pre-market period.
The design of token economics becomes more critical: Project teams must carefully design token release (Vesting) plans. Reasonable initial circulation, lock-up mechanisms, and release rules are crucial for stabilizing prices post-launch.
Project teams should pay more attention to token economics and long-term community building.

For investors, before participating in pre-market trading, it is essential to have an extremely in-depth understanding of the project's fundamentals and to fully recognize the significant volatility and manipulation risks associated with low liquidity, only investing funds they can afford to lose. In the extreme conditions of Hyperliquid XPL, even seemingly robust hedging strategies can "instantaneously go to zero" in the face of whale manipulation and extreme volatility.

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