Introduction to pre-market futures

What are pre-market perpetual futures?

Pre-market perpetual futures are contracts offered on underlying assets that are not yet listed on spot markets (both DEXs and CEXs). Apart from how the index price is calculated, they function the same as standard perpetual futures.

Key differences from standard perpetual futures

Index price

Since there is no spot market for the underlying asset, the index price is generated using a fitted model based on perpetual futures market data to ensure normal contract operation.

Synthetic price algorithm

1. The order book is used to calculate the depth-weighted buy price and sell price. The depth-weighted mid-price is then: (depth-weighted buy price + depth-weighted sell price) ÷ 2. The order book depth applied varies by trading pair, typically between 500 and 2000 USDT for pre-market futures. The method is the same as that used for funding rate calculations.

2. The index price at Tn is calculated as: α × depth-weighted mid-price at Tn + (1 − α) × index price at Tn−1, where α = 0.1818 by default, adjusted as needed based on market conditions.

When do pre-market perpetual futures become standard perpetual futures?

After the underlying asset becomes available on spot markets and its price stabilizes, we will switch the pre-market perpetual futures to standard perpetual futures. This process will have minimal impact on users, as we simply replace the index price with one calculated based on weighted spot market prices, so users will hardly notice any change.

However, if spot and futures prices diverge significantly, liquidation risks may increase. Although a smoothing mechanism is applied during the switch, uncontrollable market factors can still cause sharp price movements. For this reason, we recommend using lower leverage when trading pre-market perpetual futures.

Trading risks

Liquidity

Since the underlying asset does not have a spot market and is priced entirely by the derivatives market, the order book depth is typically lower compared to standard futures. Execution may be less frequent, so smaller order sizes are recommended to reduce the risk of slippage.

Price volatility

Similarly, since there is no spot market to anchor the price and pricing relies solely on derivatives markets, price volatility is generally higher than with standard futures. Therefore, pre-market perpetual futures typically offer lower leverage to help protect users from liquidations caused by high volatility.