More accurate than brokerages? TradeXYZ pre-prices CXMT

Original by Odaily Planet Daily (@OdailyChina)

Author | Golem (@web3_golem)

On July 27, Changxin Memory Technologies (CXMT), a leading domestic memory chip manufacturer, debuted on the A-share STAR Market, setting multiple A-share historical records on its first trading day. CXMT became the first tech stock in A-share history to open with a market cap exceeding RMB 3 trillion (opening market cap of RMB 3.31 trillion) and the first stock to surpass RMB 100 billion in trading volume within the first hour of listing. On its first day, CXMT closed up 465.82%, with a total market cap of RMB 3.28 trillion, ranking first among A-shares and surpassing Intel's market cap on the U.S. stock market.

Another perspective is that CXMT's listing has for the first time confirmed the "dominance" of TradeXYZ in pricing the A-share market.

As the first pre-market contract for an A-share stock listed on TradeXYZ, CXMT opened at RMB 49.5 on the A-share market. At the current USD/CNY exchange rate of 6.77, this is approximately $7.31; at the same time, the CXMT contract on TradeXYZ was quoted at $7.12, a discrepancy of less than $0.2.

TradeXYZ Successfully "Pre-Priced" the CXMT IPO

As a popular tech stock, most domestic brokerages and institutions believed before the CXMT IPO that a first-day valuation between RMB 2 trillion and RMB 3 trillion was reasonable. Expectations above RMB 3 trillion had already fully factored in a "domestic scarcity premium" and future performance assumptions, with a valuation of RMB 4 trillion only being seen under extremely optimistic scenarios.

However, reality proved that the reports from domestic brokerages and institutions were too conservative. Instead, the overseas platform TradeXYZ provided a more accurate price discovery for CXMT.

On July 15, TradeXYZ listed the CXMT pre-market perpetual contract on Hyperliquid's HIP-3 market, supporting up to 5x leverage. Within hours of listing, a CXMT buy order worth millions of USD appeared at $6 on the Hyperliquid order book. The price then climbed steadily, reaching a daily high of $8.64. Based on this pre-market price, CXMT's market cap exceeded $550 billion, or over RMB 3.72 trillion, surpassing even Tencent to become the 32nd largest company globally by market cap.

The CXMT contract price on TradeXYZ reached a high of $8.64 on its first day of listing

As the first individual stock contract on the A-share market listed by TradeXYZ, it provided risk exposure for investors who were ineligible to participate in the CXMT IPO subscription and trading. Therefore, the initial pricing of CXMT on its first day was also influenced by some hype, excessively pushing up the pre-market contract price.

The market quickly returned to rationality. In the days leading up to CXMT's listing on July 27, the CXMT pre-market contract price showed an overall downward correction, eventually settling around $6.1-$6.4 (approximately RMB 41-43) on July 26, with the market valuation still hovering around RMB 3 trillion.

On July 27, CXMT's opening market cap was RMB 3.31 trillion, which did not deviate significantly from its valuation during the Pre-IPO phase on TradeXYZ. During the call auction period before CXMT's market open, the CXMT pre-market contract price on TradeXYZ further converged towards the A-share auction price. Ultimately, when the A-share market opened at 9:30 AM, the CXMT pre-market contract price was $7.12, a discrepancy of less than $0.2 from the opening price of the CXMT A-share spot.

This left investors hoping to arbitrage CXMT between the on-chain market and traditional financial markets empty-handed. Well-known crypto KOL Jiang Zhuoer posted that there was "nothing to play with" regarding CXMT, because the price during the auction phase was essentially the same as the price on TradeXYZ. "Currently, you can neither buy nor arbitrage."

Therefore, TradeXYZ's price discovery for the CXMT IPO was extremely successful. This means that TradeXYZ's price discovery mechanism is becoming increasingly sophisticated and is further eroding traditional finance's pricing power over corporate IPOs in the global market.

Discount Trading After Market Open

However, after the market opened, as the CXMT contract was converted to a standard XYZ perpetual contract supporting up to 10x leverage, the discrepancy between the mark price of the CXMT contract on TradeXYZ and the spot price of CXMT on the A-share market widened. The CXMT contract on TradeXYZ traded at a discount compared to the CXMT A-share spot.

This is actually related to TradeXYZ's oracle mechanism. During the Pre-IPO stage, because there is no real external price, the CXMT contract price is determined by TradeXYZ's internal oracle. When CXMT officially lists, the CXMT contract price will gradually switch to tracking the external oracle price based on the A-share spot trading price. Therefore, the discrepancy in the CXMT contract's mark price essentially arises from the difference with the external oracle price.

After market open, a discrepancy emerged between the CXMT contract's mark price and the oracle price, widening to $0.4 at one point

The reason for this discrepancy is that TradeXYZ implemented a gradual convergence limit during the transition period when the contract price switches from tracking the internal oracle to tracking the external oracle. This means restricting the contract's mark price from converging to the target price at a controlled, slow speed. The oracle price updates approximately every 3 seconds, but each change is limited to ±1%. The contract's mark price can only converge gradually to the target price. Consequently, this limitation caused the CXMT contract's mark price to trade at a discount while catching up to the external oracle.

However, when the A-share market is closed, the CXMT contract price will switch back to being based on the internal oracle price, effectively entering a "pre-market" trading phase.

Although CXMT is not the first individual stock Pre-IPO contract listed on TradeXYZ – the platform had previously excelled in price discovery for the IPOs of US companies like Cerebras and SpaceX – for TradeXYZ, pricing CXMT was also an important test of its contract price mechanism, funding rates, and liquidity performance. Notably, the oracle also needed to layer a USD/CNY exchange rate conversion on top of the original tracked quote, meaning the P&L of position holders needed to reflect both stock price and exchange rate fluctuations.

Looking at the results, aside from the brief discount trading episode caused by the oracle transition, TradeXYZ's transition for CXMT from pre-market contract to standard contract was relatively smooth, avoiding the public controversy that occurred during the SpaceX listing (Related reading: Hyperliquid Pre-market Contract Controversy: The Promised SpaceX Equity Numbers, Why Don't They Count?).

From a data perspective, as of writing, the open interest for the CXMT contract on Hyperliquid was $91.85 million, reaching a peak of $100 million. The 24-hour trading volume was $232 million, approximately 0.16% of the first-day trading volume of the CXMT A-share spot.

OI and Trading Volume for the CXMT contract on Hyperliquid

However, judging TradeXYZ's value solely by trading volume would clearly underestimate its significance. The hundreds of millions of dollars in trading volume on TradeXYZ is still just a drop in the bucket compared to traditional stock exchanges, and its liquidity position cannot shake established institutions. What it truly changes is the barrier to entry and the method of participating in the price discovery game for CXMT.

For global investors, TradeXYZ offers a new channel to gain price exposure to the A-share market without needing to enter it directly. In the past, ordinary investors faced enormous hurdles to participate in the A-share STAR Market, and overseas investors found it particularly difficult to gain direct A-share risk exposure.

On TradeXYZ, without requiring a securities account, asset thresholds, or geographical restrictions, any wallet user holding stablecoins can gain risk exposure to trade CXMT. Furthermore, trading is not affected by traditional financial market closures; even at this moment, the on-chain price discovery game for CXMT continues.

CXMT's Largest On-Chain Short Position Floating Loss Exceeds $1.4 Million

On CXMT's first trading day, bearish on-chain whales suffered significant losses, with the most representative being the "largest CXMT short seller."

Before CXMT's listing, the "largest CXMT short seller" (0xf2...1244) on Hyperliquid had been adding to their CXMT short position for several consecutive days. According to hypurrscan data, this address currently holds 2.6 million CXMT short positions, valued at approximately $18 million, with an average entry price of $6.4 (approximately RMB 43.3). As of writing, this position has an unrealized loss of $1.39 million.

The largest CXMT short position on Hyperliquid

Notably, one hour before CXMT's listing today, they placed closing orders for the short position at prices between $2 and $4.5 (approximately RMB 13 to 30). This implies they believe the fair valuation for CXMT is at most RMB 2 trillion.

There were also on-chain whales who profited handsomely by going long on CXMT during the pre-market phase. Address 0x2b6…32f6c began accumulating CXMT long positions as early as July 23. According to hypurrscan data, this address currently holds 977,000 CXMT long positions, valued at approximately $6.77 million, with an average entry price of $6.71 (approximately RMB 45). As of writing, it has an unrealized gain of over $200,000. This whale also holds a long position in SK Hynix worth $380,000.

Furthermore, this whale placed closing orders for the long position between $7.1693 and $7.688, indicating they believe CXMT's market cap can still challenge the RMB 3.4 trillion mark again (its intraday high hit over RMB 3.5 trillion).

Looking at the bull-bear divergence from a geographical perspective, according to HyperInsight monitoring, on the eve of CXMT's listing, attributable CXMT wallets on Hyperliquid showed that wallets from the US, Hong Kong, and Mainland China were predominantly long, while wallets tagged as Korean were the main short force in this sample. Specifically, Korean wallets held approximately $760,000 in short positions, with a short position size about 38 times their long position size. Taiwan-tagged wallets were also bearish, with a net short position of approximately $329,000.

On the long side, US-tagged wallets held $1.6 million in long positions and $345,000 in short positions, resulting in a net long of approximately $1.255 million. Hong Kong-tagged wallets held $1.3 million in long positions and $431,000 in short positions, resulting in a net long of approximately $869,000. Mainland China-tagged wallets held only $83,000 in long positions and $16,000 in short positions, resulting in a net long of approximately $67,000.

Assuming the Korean-tagged wallets' $760,000 short position was all opened before market open at a uniform price of $6.48 with no subsequent adjustments, and calculated at 1x leverage, the theoretical unrealized loss for the short position would be approximately $48,500, representing a loss rate of about 6.4%.