Pre-market contracts: killing or boosting token launches?
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Pre-market contracts: killing or boosting token launches?
What impact does the pre-market have on token launches?
Navigating Web3 tides with focused insightsBy KarenZ, Foresight News
Pre-market trading and pre-listing contracts are becoming crucial components of major token launches.
This mechanism, provided by third-party platforms before a token’s official listing, offers early trading channels that release market price signals in advance and attract investor attention. It not only shifts the timeline of price discovery but also influences the token's initial performance upon official launch.
This article systematically reviews the evolution of pre-market trading and explores its impact and challenges on token launch strategies.
What is the pre-market? How does it work?
The pre-market refers to an early trading environment offered by third-party platforms before a token is officially listed. These trades often take the form of futures contracts or token subscription rights, simulating real market behavior to enable price discovery, gauge market sentiment, and offer early investors opportunities for speculation or hedging.
Recently, pre-listing contracts have drawn significant attention, allowing users to take long or short positions on token prices before listing.
Different platforms employ varying pricing mechanisms. For example, Binance’s recently launched pre-market contracts use a dynamic mark price calculated as the average of transaction prices over the past 10 or 20 seconds, updated every second. To suppress abnormal volatility, the mark price is capped at a ±1% change per second. If fewer than 41 trades occur within 20 seconds, the system uses the average of the most recent 40 trades to enhance resistance to manipulation.
Meanwhile, HyperLiquid, a decentralized derivatives exchange, introduced its "Hyperp" contracts with an initial pricing model that did not rely on external oracles, instead anchoring funding rates to an 8-hour EMA of its own mark price. However, following extreme market conditions during the XPL contract, team members announced plans to incorporate external pre-market price data and adopt a hybrid pricing model to improve robustness.
Evolution of the Pre-Market
In the early days of cryptocurrency, a formal “pre-market” barely existed—or was extremely immature—limited mainly to small-scale OTC transactions. Early angel investors, advisors, or team members of projects might privately transfer equity or promises of future tokens, but these trades:
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Occurred only within tight-knit, trust-based circles.
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Were individually negotiated without a unified price discovery mechanism.
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Suffered from extremely poor liquidity: matching buyers and sellers was difficult.
Later, as numerous projects raised funds but faced delays of months or even a year before listing on exchanges, strong speculative demand gave rise to pre-market trading. Some centralized exchanges introduced "IOU" (I Owe You) tokens representing claims on future tokens.
Following this, platforms like Whales Market, an OTC DEX, supported off-exchange trading, pre-listing markets, and points markets. These early pre-markets had shallow depth, were highly susceptible to manipulation by “whales,” and exhibited high volatility.
As issues from earlier stages emerged and the market matured, control began shifting toward major centralized exchanges and HyperLiquid. Since the second half of last year, these platforms have sought to formalize pre-market trading and integrate it into their ecosystems. For instance, Binance combined new token mining—allowing users to subscribe at fixed prices—with subsequent pre-market trading, creating bundled products and a more “controlled” pre-market environment.
In Bitget’s pre-market offering, buyers and sellers can place orders in advance and execute trades as needed, followed by settlement. In this model, sellers don’t need to hold the new token upfront; they only need to secure sufficient tokens before the designated settlement time.
This year, pre-market trading has increasingly taken the form of perpetual contracts, with trading activity concentrating around these instruments. Major exchanges such as Binance, Bitget, Bybit, and OKX provide price discovery functions while effectively managing market risks through measures like maximum leverage caps, tiered margin systems, and price fluctuation bands. Additionally, HyperLiquid’s "Hyperp" pre-market contracts have shown strong activity, with growing market attention and rising trading volume.
From simple IOU vouchers to complex pre-listing perpetual contracts, the evolution of the pre-market reflects the market’s escalating demands for liquidity, speculative efficiency, and risk management.
Impact of the Pre-Market on Token Launches
The pre-market / pre-listing contracts have fundamentally changed the rules and logic of token launches. The impact is multifaceted and undeniably a double-edged sword.
Overall, it has transformed token launches from a “one-time event” into a “continuous process,” advancing price discovery ahead of the official listing.
Positive Impacts
1. Early Price Discovery Mechanism
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Traditional model: Before listing, the price is opaque. The opening price is estimated by the project team and exchange based on private sale prices and market sentiment, often leading to severe deviations (e.g., immediate dump or wild swings).
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Pre-market trading establishes a continuously evolving, market-driven expected price through ongoing trading. This provides reference points for the project team, exchanges, and community, helping set a more reasonable and widely accepted spot opening price and smoothing post-listing volatility.
2. Strong Market Warm-up and Consensus Building
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Pre-market trading sustains attention for weeks or even months, prompting traders and KOLs to deeply analyze the project’s fundamentals, tokenomics, and team background when making trading decisions.
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This sustained engagement acts as prolonged, free market education, attracting a broader user base at listing—not just those who were “camping” early on.
3. Risk Hedging Tool for Early Supporters
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Early private investors, advisors, and team members typically hold large amounts of vested tokens. They face the risk of the token price falling below their cost basis upon unlocking.
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Pre-market contracts allow them to hedge against this downside risk and lock in profits before the token lists.
4. Attracting Market Makers and Institutional Interest
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High pre-market trading volume and visibility signal a project’s potential. Professional market makers and institutional investors are thus more likely to engage, providing post-listing liquidity—an essential factor for healthy long-term trading.
Negative Impacts and Challenges
1. “Expectations Priced In” Leading to Weak Post-Listing Performance (Core Risk)
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If the pre-market price is excessively hyped, creating an inflated expectation, the classic “buy the rumor, sell the news” pattern may unfold upon listing, severely undermining market confidence.
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Take WLFI as an example: On September 1, 2025, WLFI—the token of World Liberty Financial, a project associated with the Trump family—officially launched. Its pre-market had been active for several weeks prior, with prices significantly rising due to speculative capital. However, after listing, the price quickly dropped. Despite support from Binance, Upbit, Coinbase, and other major platforms, upward momentum was lacking, indicating that speculative demand had already been exhausted during the pre-market phase.
2. Insufficient Liquidity and Widespread Price Manipulation
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Pre-market contract markets typically suffer from low liquidity initially. This allows “whales” or arbitrageurs to manipulate contract prices with relatively small capital, creating artificial FOMO or FUD.
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Manipulated price signals mislead the entire market and may lead retail investors to blindly chase rallies or panic sell. The extreme market event involving Hyperliquid’s XPL on August 25 was a classic case of pre-market manipulation.
3. Systemic Risks
The Hyperliquid XPL incident also exposed weaknesses in pre-market contracts regarding risk controls, oracle mechanisms, and position management.
4. Erosion of Project Team’s Pricing Power
Under the traditional model, project teams and market makers held significant control over the opening price. Now, this power has partially shifted to the pre-market, which may be dominated by short-term speculation, increasing 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 exhaustion, and price manipulation, its positive roles in price discovery, risk management, and market efficiency cannot be ignored.
In light of the irreversible trend of pre-market influence, project teams must continuously optimize their launch strategies:
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Shift from “listing” to “listing management”: Project teams can no longer focus solely on the day of listing. They must proactively guide positive sentiment by releasing product updates, partnership announcements, exchange listings, and transparent tokenomics to counter manipulation and FUD, thereby stabilizing market expectations throughout the pre-market period.
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Tokenomics design becomes more critical: Teams must carefully structure vesting schedules. Appropriate initial circulating supply, lock-up mechanisms, and release rules are vital for post-listing price stability.
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Greater emphasis must be placed on sound tokenomics and long-term community building.
For investors, participating in pre-market trading requires deep understanding of the project’s fundamentals and full awareness of the high volatility and manipulation risks stemming from low liquidity. Only capital that one can afford to lose should be allocated. As seen in the Hyperliquid XPL event, even seemingly robust hedging strategies can be wiped out instantly under whale manipulation and extreme volatility.
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