Coinbase has announced a new feature that allows select institutional and retail traders to speculate on cryptocurrencies before they officially launch. This pre-launch markets feature, available through Coinbase's international division, enables users to trade perpetual futures contracts on tokens not yet available on spot exchanges. According to a post on Coinbase's website published Monday, the first pre-launch listing will go live on the same day.

Institutional users deemed eligible for the new market can access it via Coinbase International Exchange, while eligible retail traders can utilize Coinbase Advanced. However, this feature is only available outside the U.S., Canada, and the UK.

"Pre-launch markets on Coinbase allow users to participate in price discovery for upcoming projects on a trusted and secure platform," the company said in an informational blog post. This new trading option provides a unique opportunity for traders to speculate on the future value of tokens before they are officially listed on spot exchanges. Once the underlying token is launched, the pre-launch futures contract will convert into a standard perpetual contract.

Coinbase noted that pre-launch markets operate differently from standard perpetual futures. Specifically, these markets use a 4-hour exponential moving average (EMA) of a token's mark prices to determine the "Pre-Launch Index Price." Unlike standard perpetual futures, pre-launch markets will not be part of Coinbase’s Liquidity Support Program (LSP), which means they could experience lower liquidity, higher volatility, and increased liquidation risk. Consequently, these markets carry a higher risk of Auto-Deleveraging compared to standard perpetual futures.

To mitigate some of these risks, Coinbase has implemented more conservative trading conditions for pre-launch markets. While regular perpetual futures on Coinbase offer up to 10x leverage, pre-launch markets have a maximum leverage of 2x and a position limit size of just $50,000 notional. This move appears to be aimed at curbing excessive risk-taking and ensuring a more controlled trading environment for these high-risk markets.

The introduction of pre-launch markets represents Coinbase's effort to expand its offerings and cater to the growing interest in early-stage cryptocurrency investments. By providing a platform for price discovery and speculation on upcoming tokens, Coinbase aims to attract a broader range of institutional and retail investors looking to capitalize on new digital assets before they hit the mainstream market.