A U.S.-based crypto platform has rolled out pre-IPO perpetual futures, debuting with a contract tied to Elon Musk–backed SpaceX, which is valued by the platform at around $1.8 trillion ahead of an expected listing as soon as next week. The new product lets traders speculate on the valuation of private companies before they go public, without conferring any ownership or voting rights.
How the new contracts work
The pre-IPO perpetual futures are settled in a U.S. dollar stablecoin, trade around the clock, and have no expiry or rollover. If the underlying company completes an initial public offering, the contract automatically converts into a standard perpetual futures contract referencing the listed shares, the firm said.
Leverage is capped at 5x for the new product, below the 10x offered on stock perpetual futures and 20x on exchange-traded fund (ETF) perpetual futures on the same platform. The company said the lower leverage reflects the higher risk and uncertainty around private company valuations.
Valuation-based pricing and risk profile
Unlike conventional perpetuals that reference actively traded market prices, the platform’s pre-IPO contracts use valuation-based pricing. The firm warned that this structure can lead to higher volatility, thinner liquidity, and a greater chance of forced liquidations.
A recent incident on a separate venue highlighted those risks. A pre-IPO futures contract on the same aerospace company plunged about 45% after incorrect pricing data from an external provider triggered liquidations. The data provider later compensated affected traders, but the episode showed how pricing models and data feeds can amplify swings in these markets.
Growing trend of private exposure via crypto derivatives
The launch comes amid rising interest in derivatives that mimic exposure to high-profile private companies across both centralized and decentralized platforms, including the likes of Hyperliquid and Binance. These contracts allow traders to track and trade perceived valuations of private firms but do not represent actual shares or contractual claims on equity.
The broader crypto derivatives sector has expanded sharply. Monthly volumes in crypto derivatives reached about $1.33 trillion in September 2023, far outpacing spot trading activity, as more platforms experiment with new contract types tied to both public and private assets.
Market structure and liquidity concerns
Market watchers note that pre-listing instruments such as pre-IPO perpetual futures introduce a distinct risk profile. Because prices are derived from valuation models and secondary data rather than active public markets, swings can be sudden, and order books may be shallow.
One tokenized version of a SpaceX IPO on a decentralized exchange recently showed just $26 in 24-hour trading volume, underlining how limited liquidity can complicate entering or exiting positions without moving the price. The platform’s decision to limit leverage to 5x on the new contracts signals a more cautious stance toward these risks.
Access and regulatory backdrop
The pre-IPO perpetual futures are available only to qualified users outside restricted jurisdictions, including the United States, Canada, the United Kingdom, Singapore, India, and Australia. The company already offers a range of derivatives in selected global markets, operating under local regulatory frameworks.
In parallel, the firm’s financial division last week secured approval to operate as a U.S. futures commission merchant. That license, under oversight from the Commodity Futures Trading Commission (CFTC), enables institutional clients in the United States to access global derivatives markets, including crypto futures and options.
These developments arrive as U.S. regulators slowly open the door to more digital asset–linked derivatives. The CFTC recently allowed prediction market Kalshi to list a perpetual futures contract tied to Bitcoin and permitted Coinbase to route clients to perpetuals offered via its Deribit-linked entity, marking a first for that segment in the U.S. market.
Outlook for pre-IPO crypto derivatives
The launch of the SpaceX-linked contract marks a notable extension of crypto derivatives into the private markets arena, giving a broader base of traders synthetic exposure to headline private-company valuations before an IPO.
Key features of the product at a glance:
- Underlying: valuation of SpaceX, a private aerospace firm backed by Elon Musk
- Settlement: U.S. dollar–backed stablecoin
- Trading: 24/7, no expiry; converts to standard perpetual if IPO completes
- Leverage: up to 5x, below the platform’s stock and ETF perpetual limits
As more platforms experiment with similar structures, market participants will be watching how these instruments handle episodes of extreme volatility, data errors, IPO delays, or cancellations, and whether liquidity can scale to match growing demand for exposure to private company valuations through crypto-native products.
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