Editor: Wu Talks Blockchain

TL;DR

● Not a stock: CXMT is a Pre-IPO perpetual contract deployed by Trade.xyz through HIP-3, tracking the expected USD value of one Longsys Technologies A-share, not providing stock ownership, IPO allocation, dividends, or voting rights.

● Order book drives price: Trade.xyz artificially set an initial reference price of $5, after which the actual transaction price is primarily determined by the buy and sell supply and demand from the Hyperliquid on-chain order book. Since there are no tradable spot prices before the IPO, the contract price does not need to be close to the IPO issuance price of 8.66 yuan.

● Multiple mechanisms control volatility: An internal oracle updates based on the order book impact price with a 30-minute EWMA smoothing; the mark price integrates data from the oracle, a 150-second price deviation EMA, and buy/sell order data for calculating profit and loss and liquidation.

● Price guardrails can move dynamically: The single Discovery Bound for CXMT is 20%, allowing for 7 re-anchors both upwards and downwards, meaning the price once touched $6, $7.2, and $8.64, instead of being consistently limited to around $5 ± 20%.

● Switching to external prices after listing: After Longsys Technologies is listed and enough market data is generated, the contract is expected to convert to a standard stock perpetual, with the oracle switching to RMB prices for A-shares converted to USD. Price differences before and after the conversion may cause jumps in profit and loss or even trigger liquidation.

Longsys Technologies has not officially landed on the STAR Market yet, but a "stock price" that can be traded 24/7 has already appeared on Hyperliquid.

On July 14, Trade.xyz launched the Longsys Technologies Pre-IPO perpetual contract through Hyperliquid's HIP-3 framework, with the code xyz:CXMT. The contract has a $5 initial reference price, supports up to 5x leverage, and settles in USDC.

After the contract went live, prices sequentially reached $6, $7.2, and $8.64. As of July 16, 02:13 UTC, Hyperliquid on-chain data showed the mark price of CXMT at approximately $7.37, with a 24-hour trading volume of about $50.56 million and an open contract nominal value of about $23.07 million.

Meanwhile, Longsys Technologies has set the A-share issuance price at 8.66 yuan per share, with an issuance valuation of 579.18 billion yuan, and is expected to be listed on July 27. Based on an exchange rate of approximately 6.77 RMB to USD, the contract price of $7.37 on Hyperliquid is equivalent to about 49.9 yuan, which is approximately 5.76 times the issuance price; and with about 66.88 billion shares issued, this corresponds to an implied market value of about 3.34 trillion yuan. Reports from Reuters indicate that some investors expect Longsys’s post-listing valuation to concentrate between 3 trillion and 5 trillion yuan.

However, the $7.37 here is not the true stock price of Longsys Technologies, nor is it a valuation read from any primary market database by Trade.xyz. It is a derivative price generated by the order book, internal oracle, mark price, funding rate, and price guardrails.

This is a contract about future stock prices

According to the official definition from Trade.xyz, Pre-IPO Perpetual, abbreviated as IPOP, is a cash-settled linear perpetual contract used to trade market expectations of a company's public equity value post-listing.

The CXMT contract specifically tracks the USD value of one share of Longsys Technologies common A-share, not the company's total market capitalization. Post-listing, the oracle will convert Longsys Technologies’ RMB stock price into USD based on the current exchange rate.

Holding a CXMT contract does not mean holding Longsys Technologies stock. Traders will not receive IPO allocations, dividends, voting rights, and cannot exchange the contract for real stocks after listing. Both long and short sides are merely trading expectations of Longsys's future public market price.

Therefore, what is traded on Hyperliquid is not "How much is Longsys worth now," but "What participants in this contract believe one share of Longsys may be worth after the listing."

Hyperliquid provides the trading system, Trade.xyz sets market rules

CXMT was not directly launched by the Hyperliquid core team, but was deployed by Trade.xyz through HIP-3.

HIP-3 allows third-party developers to establish their own perpetual contract markets on HyperCore. HyperCore is responsible for the on-chain order book, matching, margins, clearing, and settlement; the deploying party determines the trading subject, oracle method, leverage cap, risk parameters, and executes conversion or settlement when necessary.

In other words, there are two layers of division of labor in this system:

Main responsible party for tasks limit orders and filling orders HyperCore determines the actual transaction prices that traders buy and sell initial reference price and contract parameters Trade.xyz defines where the market starts and how it can operate internal oracle and parts of mark price input Trade.xyz Relayer transforms order book information into funding rates and liquidation reference prices margin and liquidation execution HyperCore manages position risk based on the mark price

Therefore, although it uses an entirely on-chain order book to complete transactions and settlements, the pricing method and oracle updates still depend on Trade.xyz's market design and Relayer.

The first $5 is not discovered by the market

Any price discovery requires a starting point.

According to the CXMT contract parameters, Trade.xyz set its initial reference price at $5. The official describes this price as a "discretionary reference price," meaning it is a reference value determined by the platform itself, and explicitly states that it is not a forecast of the IPO issuance price, listing opening price, or post-listing stock price.

The official also did not disclose the specific basis for the $5, whether it comes from a specific financing, what kind of valuation model, or which institution's quote.

Thus, the pricing of CXMT is not formed completely freely from scratch, but is initially set by Trade.xyz to establish a coordinate origin, allowing the order book to start trading near this origin.

This is also the first step in understanding the entire mechanism: the initial price comes from the deploying party, while subsequent prices are mainly derived from traders.

Actual transaction prices are determined by the order book

After the market goes live, traders and market makers can submit buy and sell orders in the central limit order book of HyperCore, where the system matches based on price and time priority.

If a buyer is willing to purchase at a higher price, while a seller is unwilling to sell at the current price, the transaction price will rise; conversely, it will fall. Before Longsys is listed, there are no external markets that can continuously provide real spot prices, thus there is no external oracle enforcing the CXMT contract to be close to the IPO issuance price of 8.66 yuan.

This is in stark contrast to typical cryptocurrency perpetual contracts. If a BTC perpetual contract deviates from the BTC price at multiple spot exchanges, arbitrageurs can simultaneously buy and sell spot and contracts to drive prices toward convergence. Before the listing of CXMT, there are neither freely tradable spots nor real stocks that can be delivered to the contract, preventing traders from engaging in the same risk-free arbitrage.

As a result, the transaction price of CXMT can remain above or below the issuance price for an extended period. It reflects the expectations of order book participants, rather than a price that can be verified through spot arbitrage.

Why did the price sequentially stop at $6, $7.2, and $8.64?

CXMT has set a 20% Discovery Bound, meaning the price discovery range.

With an initial reference price of $5, the mark price can only move between $4 to $6. When continued buying pressure pushes the internal oracle close to the upper limit, the system can reset $6 as the new reference price, thereby shifting the next range to $4.8 to $7.2.

If the price continues to rise, the reference price may move again to $7.2, and the new upper limit becomes $8.64.

This process can be expressed as:

• First upper limit: 5 × 1.2 = $6
• Second upper limit: 6 × 1.2 = $7.2
• Third upper limit: 7.2 × 1.2 = $8.64

CXMT allows for a maximum of 7 re-anchors upwards and downwards. Therefore, 20% is just a momentary range relative to the current reference price at any point, rather than representing a permanent restriction of the price within 20% of the initial price.

This also explains the distinct staircase structure observed in the early movement of CXMT. $6, $7.2, and $8.64 are not three naturally formed technical resistance levels but are directly calculated price guardrails based on contract parameters.

This design can reduce the risk of sudden spikes or drops caused by single trades when new markets just go live, but it will also affect price formation: when the market reaches the upper limit, the chart may not necessarily reflect natural supply-demand equilibrium, but rather it could just be the price hitting the system boundary temporarily.

Oracle is not the latest transaction price, but a smoothed order book price

CXMT has no external stock price for reference, thus it uses Trade.xyz's internal oracle.

According to Trade.xyz's oracle documentation, the system first calculates the order book's impact bid price and impact ask price, which are the average prices when executing a specified nominal amount on both buy and sell sides.

It does not directly use the best buy price, best sell price, or the latest transaction, but monitors whether the overall order book is above or below the current oracle:

• If the overall executable buy price of the order book is higher than the oracle, the internal oracle will gradually move up;
• If the overall executable sell price is lower than the oracle, the internal oracle will gradually move down;
• If the current oracle remains between the buy and sell orders, the adjustment may be zero.

Subsequently, the system smooths this change using a continuous exponential weighted moving average with a time constant of 30 minutes.

This means that while the transaction price can rise quickly, the oracle will not experience an immediate uniform jump. Only when higher buy and sell orders persist will the oracle gradually catch up with the market. Compared to directly using the latest transaction price, this method is less susceptible to being pushed by a single small abnormal trade.

However, this also means that the oracle is not an independent "fair value" external to the market, but a delayed and smoothed version of the order book price.

Mark Price determines liquidation, but is not equal to the transaction price

In addition to the transaction price and oracle, the system also includes a Mark Price used to calculate unrealized profits and losses, margins, and liquidations.

According to Trade.xyz's documentation, the Mark Price takes the median of the following three items:

1. Internal oracle price;
2. Oracle plus a 150-second EMA of the deviation of the perpetual contract mid-price relative to the oracle;
3. The median of the best buy price, best sell price, and latest transaction price.

Taking the median of the three reduces the likelihood of a single abnormal input directly triggering liquidation. The Relayer's single update is also limited to ±0.5% of the current price to slow down sudden spikes.

Therefore, there are multiple different “prices” present in the CXMT market:

Price main uses transaction price the actual price traders buy or sell oracle price funding rate reference, also as an input for mark price mark price calculating unrealized profits and losses, margins, and liquidations IPO issuance price the real stock's issuance price, currently does not directly constrain on-chain contracts

What is usually referred to as “CXMT rises to $8” typically refers to the order book transaction price or the mark price shown on the interface; the two do not always align perfectly during periods of intense volatility.

Funding rate is responsible for "damping," not anchoring to real stock prices

Typical perpetual contracts rely on funding rates to bring contract prices closer to spot prices. However, before the listing of CXMT, there was no spot market, meaning the funding rates could only compare the difference between the contract price and the internal oracle.

Trade.xyz set the funding rate multiplier of IPOP to 0.005, while the normal multiplier used for XYZ stock perpetuals is 0.5. In other words, the funding rate intensity of the Pre-IPO contract is only about 1% of that of a typical XYZ contract.

Funding rates are still paid hourly between longs and shorts, but their role is significantly weakened. This is mainly because the internal oracle itself derives from the same order book. If the funding rate is too high, while waiting for IPO in the long term, one-sided positions may incur very high funding costs.

A low funding rate allows traders to express their views on the listing price for a longer time, but at the cost of lacking strong external anchors for the price. The funding rate can only suppress short-term deviations of the contract price from the internal oracle; it cannot determine whether Longsys should be valued at 500 billion or 3 trillion.

After listing, external stock prices will take over

Once Longsys Technologies starts normal trading on the STAR Market and generates enough external market data, CXMT is expected to convert to a standard stock perpetual contract.

At that time, the oracle will be based on Longsys A-share prices and converted according to the current RMB to USD exchange rate; the funding rate multiplier will also be restored from 0.005 to 0.5 used for regular XYZ stock perpetuals.

This conversion may be the moment the contract truly faces a test.

If the real stock price post-listing is close to the on-chain price, the internal oracle can seamlessly connect with the external oracle; if there is a significant divergence between the two, the Mark Price could experience jumps during the conversion, leading to changes in position profits and losses or even triggering liquidations.

Trade.xyz has set the expected listing date for CXMT as July 27, with an extension period until September 25 at the latest. If there are significant delays or cancellations in the listing, the contract will default to being settled according to the full cycle TWAP from launch to settlement; however, in cases of mergers, major adverse events, or other special circumstances, Trade.xyz reserves the right to adopt other settlement methods.

Does this price discovery have any significance?

The Cerebras Pre-IPO contract previously launched by Trade.xyz provides a relatively successful case. Statistics from Talos show that the VWAP of the Hyperliquid contract for Cerebras in the last hour before its Nasdaq opening was about $354.54, while the actual opening price was $350, representing a difference of about 1.3%. However, its IPO issuance price was only $185. This indicates that the contract is closer to predicting the opening price of the public market rather than the issuance price determined by underwriters.

However, a single case is insufficient to prove that this mechanism can stably and accurately price all unlisted companies.

The CXMT market, in particular, has several limitations.

First, before listing, there can be no direct arbitrage between spot and contracts, allowing for possible persistent mispricing. Secondly, on-chain participants do not represent the entire capital market, meaning prices can be influenced by a few large accounts, the risk preferences of crypto traders, and liquidity structures. Furthermore, the discovery range may artificially shape short-term trends, with staircase-shaped breakthroughs not entirely being the result of natural supply and demand. Finally, Trade.xyz is responsible for both initial prices and contract parameters, as well as calculating and submitting oracle inputs; the risk of the deploying party cannot be ignored.

Therefore, the price of CXMT on Hyperliquid is better understood as a public, continuous, and genuinely funded expectation indicator, rather than a definitive price for Longsys Technologies post-listing.

Conclusion

Hyperliquid did not conjure the stock price of an unlisted company out of thin air.

More accurately, Trade.xyz first set an initial reference price of $5 and a set of market rules, and then traders submitted actual buy and sell intentions through the on-chain order book; the internal oracle smooths the order book's impact price into funding rate references, the Mark Price is responsible for margins and liquidations, and the Discovery Bound limits the speed of price movement in the short term. Once the real stock is listed, the external A-share price will take over the oracle.

Thus, the pre-listing "stock price" on Hyperliquid can be summarized as:

Artifically set starting point + order book supply and demand + internal oracle smoothing + funding rate damping + price range guardrails.

It is not the true stock price of Longsys Technologies, nor a simple conversion of the IPO issuance price but a collective bet formed by specific market participants using real capital on the future public market price.