IOSG: On the Day SpaceX Goes Public, the First Real-World Test of Three Perpetual Mechanisms
- Core Thesis: Pre-IPO perpetual contracts, through on-chain price discovery mechanisms, offer retail investors directional investment opportunities in private companies like SpaceX before their listing, and fill the gap in after-hours trading in traditional markets. However, there are serious unresolved risks in handling corporate actions such as stock splits.
- Key Elements:
- Pre-IPO perpetuals solve the pricing problem without a spot price. Through internal oracles and price ranges, they allow the market to discover prices independently when lacking external references, keeping the prediction error for Cerebras's opening price within 1.3%.
- This market currently accounts for only about 1% of traditional finance's perpetual contract volume, indicating massive potential. The leading project, Trade.xyz, captures approximately 96.5% of on-chain volume by leveraging near-zero funding rates and the timing of IPOs.
- The difference in holding costs is the key to volume divergence. Trade.xyz's near-zero fee allows positions to be held long-term, while competitor Ventuals' high fees (45% annualized) result in cumulative costs about 350 times higher.
- Handling corporate actions is the biggest weak link: Trade.xyz lacks a rebase mechanism for stock splits, and Ventuals, relying on a single data source with outdated split data, once caused a market flash crash of 45%, highlighting the risk concentration in the absence of a standardized on-chain event processing layer.
Original Author: Mario Chow
Original Source: IOSG Ventures
TL;DR
- Why is Pre-IPO Perpetual Important? It pried open two doors that were previously closed to almost everyone: first, placing a directional bet on private companies like SpaceX and OpenAI *before* they go public, and second, obtaining a real-time price during nights, weekends, and pre-market hours when stock markets are closed but news is still moving prices. Now, anyone with a wallet can place this bet continuously, permissionlessly, just as the biggest wave of IPOs in history arrives.
- How do you price something without a public spot price? This is the core challenge for the entire category. Without an external price to copy (which can sometimes be stale for months), exchanges can only use their own order book to create a price, moving it only when real capital is willing to trade at a deviation: slowly, and at a cost high enough to prevent manipulation. Trade.xyz uses an internal oracle with a price range, while Ventuals partially relies on primary market data. Surprisingly, this works: the perpetual predicted Cerebras' opening price to within 1.3%, and priced crude oil over a weekend when traditional venues were completely dark.
- What worked in the SpaceX case? Trade.xyz dominated the on-chain market (approximately 96.5% of volume), not because its oracle is smarter, but because near-zero funding fees made holding the position almost costless; it launched *riding* the IPO catalyst; and its per-share pricing enabled cross-exchange arbitrage. On listing day (June 12), the transition from synthetic perpetual to spot tracking was clean: no oracle gap, no liquidation cascade. The perpetual tracked Nasdaq's real-time price within 1% (approximately $152 vs. a $150 match price); its pre-market mark price also closely shadowed Nasdaq's own indicative opening price (~$175), with final match prices liquidating at the lower $150.
- What unresolved risks remain? This category excels at handling prices but remains primitive at handling events. Corporate actions, especially a stock split after conversion, have no pipeline on-chain: Trade.xyz hasn't published any rebase mechanism, and Ventuals outsources this to a single data provider, which has already failed once (an expired split data point crashed its market by 45%). The bottleneck isn't price discovery; it's the boring "corporate action" processing layer. Traditional markets took a century to standardize it; on-chain hasn't rebuilt it yet. Whoever can deliver it credibly will fill the last remaining gap between these markets and the ones they aim to replace.
Background: Two Tightly Locked Doors Just Kicked Open by Crypto
Pre-IPO perpetual contracts sit at the intersection of two things that, until recently, were almost entirely closed off. Now, the crypto rails have pried open both doors.
The First Door: Pre-IPO Exposure, Finally Open to Retail
Shares of pre-IPO SpaceX or OpenAI were previously only accessible to accredited investors, venture capitalists, and a handful of secondary desks. Valuations were opaque, repriced only with each funding round. Pre-IPO perpetual contracts demolished this wall. With just a wallet, you can bet on whether a private company's valuation will go up or down, anytime, permissionlessly, without touching any shares, quotas, or voting rights. The timing couldn't be better, coinciding with the biggest wave of IPOs in history. SpaceX listed on Nasdaq on June 12th at approximately $1.77T valuation, with OpenAI and Anthropic expected to follow. For the first time, retail can position themselves before the opening bell rather than chasing prices post-listing.
The Second Door: After-Hours Trading, Now Captured by Crypto
Traditional exchanges still operate on "banker's hours." Stocks and futures shut down overnight, on weekends, and during holidays. When news breaks after hours, there's nowhere to hedge the real risk. Crypto never closes. This time gap creates a complete after-hours window for crypto, and most price discovery happens on Hyperliquid.
A key premise of this report is: that after-hours quote isn't random guessing; it often lands exactly where the real market will reopen. One Saturday, Middle East conflict pushed oil prices higher, and Hyperliquid was the only market trading. When CME crude oil futures reopened Sunday evening, the price was exactly what Hyperliquid's perpetual had already established. TD Securities estimates this platform digested about 80% of the recent oil price volatility before traditional exchanges even opened. The same applies to stocks; Trade.xyz's Cerebras perpetual was within ~1.3% of Nasdaq's final opening price. During after-hours, the perpetual contract *is* the market.
How Early Are We? Only ~1% of TradFi Perpetual Volume
CoinDesk data illustrates how nascent this market is. On Binance and similar platforms, TradFi perpetuals are dominated by commodities and stocks. Pre-IPO is just a thin sliver on top of the stacking chart, accounting for barely over 1% of total TradFi perpetual volume since its launch around May 21st.
On Binance, Pre-IPO volume is also highly concentrated on a few names: SpaceX accounts for approximately 79%, OpenAI 11%, and Anthropic 9%. This category only launched around May 20th, and Binance quickly captured over 60% of the share since then. Pre-IPO on CEXs is still in its infancy, with SpaceX as the main character. The really interesting activity is on-chain.
SPCX Exchange Landscape: Binance Leads, Hyperliquid Holds On-Chain Turf
Market Snapshot on June 10
Focusing on SpaceX itself, it is currently the entire Pre-IPO market. In this snapshot from June 10th, the total 24-hour volume for SPCX perpetual across all venues was approximately $323M. Binance led with $166M (51%), Hyperliquid followed steadily with $69M (21%), OKX had $61M (19%), followed by MEXC and a few smaller players.
On-Chain Landscape: A Market with Only One Active Builder
Data Comparison: Trade.xyz vs. Ventuals - 96.5% vs. 3.5%
Trade.xyz cumulative volume is approximately $658M, with SPCX accounting for $552M and the second asset, QNT, at $106M, all concentrated within about three weeks. Ventuals cumulative volume is about $152M, more evenly spread across SPACEX ($53M), OPENAI ($43M), and ANTHROPIC ($56M), over approximately seven months.
Placing them on the same timeline, the disparity is clear. Within the overlapping window since SPCX launched, Trade.xyz accounts for approximately 96.5% of on-chain Pre-IPO volume, corroborating third-party tracking estimates of "about 95% of the Hyperliquid Pre-IPO basket." Ventuals lists more assets, including the currently only online Anthropic and OpenAI contracts, but attracts only a small fraction of the flow. Listing is not a moat; liquidity is.
HIP-3: The Platform Layer Underneath It All
HIP-3 is an upgrade to Hyperliquid that transforms the single perpetual venue into a platform for builders to deploy perpetual DEXs. Any team staking 500,000 HYPE tokens can deploy their own perpetual markets on Hyperliquid's matching engine, HyperCore. The builder controls listing, oracle, leverage caps, and contract parameters; HyperCore controls execution, funding, liquidation, and margin. Trade.xyz is a HIP-3 deployment focused on traditional assets: making stocks, indices, and commodities into 24/7 perpetual contracts, margined and settled in USDC, with isolated margin only.
How Trade.xyz Prices a Market Without External Truth
Let's start with the problem, because only by feeling the problem does the design make sense. A normal perpetual copies a live spot price from an exchange; a Pre-IPO perpetual has no spot price to copy, and might not have one for months. So the venue must use the only thing it has, its own order book, to create a credible price, making it expensive enough that it can't be easily pushed around. Everything in this section answers one question: How do you price an asset when it doesn't have a price yet?
Two Oracle Mechanisms for After-Hours Stock Perpetuals
To understand Pre-IPO perpetuals, you first need to understand after-hours stock perpetuals. Crypto perpetuals have real-time external prices 24/7; stocks don't. AAPL only has a real market price during US stock trading hours. Therefore, the oracle supplying funding rates and mark prices needs two mechanisms: one when external data is available, another when it's not. When the external market is open, a relayer directly passes the institutional fair price (from sources like Pyth) as the oracle. When the market is closed, the oracle must rely solely on the perpetual's own order book. This is where the design gets interesting.
The Internal Oracle: Three Core Ideas
Look at where the executable order book actually is.
The relayer calculates the average execution price of a fixed $1,000 order pushed into each side of the order book, yielding an executable bid price and an executable ask price. If the current oracle price falls within this range, nothing happens – the order book is consistent with the oracle. Only when the oracle price falls outside the range, meaning real resting liquidity is willing to trade at a deviation, does the oracle get pulled towards the order book. Heavy buying pressure pulls it up, heavy selling pushes it down; noise within the range is completely ignored. To move this oracle, you must commit real liquidity, not just a few trades.
The oracle never jumps.
It decays towards the order book with a thirty-minute time constant, and a hard cap ensures each update can converge at most ~9.5% of the remaining distance, regardless of time since last update. Halts or irregular updates cannot cause a gap.
The mark price is a median.
The mark price driving margin and liquidation is the median of three candidates: the oracle itself, the oracle plus a short-term moving average of the perpetual basis, and an order book snapshot (best bid, best ask, last price). The median structure ensures fast variables can never drag the mark price too far from the slow oracle. Hourly funding pushes the market towards the oracle, with standard multipliers and caps ensuring any single hour's payment is small.
Pre-IPO Perpetual: Same Engine, Three Modifications
An IPOP (Pre-IPO Perpetual) is essentially a perpetual that can never rely on a "Friday close" price. Before listing, there simply is no external price. So the market runs the internal pricing mechanism continuously, sometimes for months. Trade.xyz makes three modifications, each revealing the nature of the problem.
- Funding rate is slashed to 1% of standard. Weekend perpetuals drift for up to two days, corrected Monday open, so normal funding is tolerable. An IPOP might trade for over sixty days without any anchor. The market tends to settle into persistent premiums or discounts reflecting pure sentiment. At standard rates, anyone positioning against the prevailing sentiment would be bled dry by funding long before the IPO arrives. Slashing the multiplier to nearly zero is what makes this contract genuinely holdable. Our view: More than any oracle cleverness, this single parameter makes Trade.xyz's product tradeable. Funding data later in this report confirms this.
- Initial seed price. Weekend markets initialize at the last real external price. An IPOP has no history, so Trade.xyz sets an initial reference price. It's not a prediction, just a mathematical starting point. For SPCX (launched late UTC May 17th), the reference was $150 per share: the midpoint of SpaceX's publicly reported $1.75T–$2T target valuation, divided by an assumed 11.87 billion fully diluted shares.
- Discovery bound. A price collar around the reference price that the mark price cannot exceed, with a rule that positions with liquidation prices outside the current collar cannot be liquidated while the collar is active.
For SPCX with 5x leverage, the collar width is +/-20% each way. A static collar either freezes price or becomes useless, so the collar is stepped: when the slow oracle climbs to 90% of the upper bound, the reference re-anchors to that bound, and a new 20% collar opens around it.
SPCX has seven such steps in each direction. Compounding these gives the contract a hard lifetime range of approximately $25 to $645 per share from the $150 seed price.
Cost to Manipulate This Market: Expensive, Obvious, Slow
This division is crucial for anyone trying to manipulate. The mark price reacts fast but has a hard ceiling; a pump could hit the ceiling almost instantly, then freeze there.
The oracle is a thirty-minute slow average; it is the gatekeeper. Only when the oracle hits the 90% trigger line does the step move up. To push the price up one step, an attacker must hold the entire order book elevated against arbitrage for nearly an hour, then repeat for the next step. Expensive, obvious, slow. This is the design intent, and it has held up stably so far.
Two Builders: Trade.xyz vs. Ventuals
Ventuals: Partial Trust in External Data
Pre-IPO perpetuals on Hyperliquid come from two HIP-3 builders answering the same question from opposite directions. Trade.xyz trusts its order book; Ventuals partially trusts external data. Ventuals prices valuation rather than share price: SPACEX price 1,989 implies a market-implied company valuation of $1.989T. Its oracle is a weighted blend: one-third from Notice.co's external valuation estimate, two-thirds from Ventuals' own mark price two-hour moving average.
Notice aggregates secondary trades, resting bid/ask quotes, funding announcements, mutual fund valuations, 409A valuations, and comparable public company data, polling at least every minute. The deliberately set one-third weight is Ventuals' answer to the "IPO pop problem": anchoring to primary market reality while giving the market mathematical room to price upwards. And don't miss the implication: this oracle is two-thirds Ventuals' own market – the design is more self-referential than marketing suggests.
Its manipulation resistance is built on a price path, not stepped collars. Orders cannot deviate more than 20% from the oracle, enforced by the matching engine. Mark price updates every three seconds, with a maximum 1% change. Once the short-term impact price deviates more than 2% from its one-minute mean, the mark price update coefficient drops to zero immediately, so sudden volatility must persist for the mark price to follow. Funding is dynamic: near the oracle it's ~15% annualized, rising exponentially with deviation, approaching ~1% hourly near the collar edge.
The endgame design is completely different. Upon listing, Ventuals settlements and stops: funding goes to zero, the mark price is overwritten to the valuation implied by the first-day closing price, and all positions are forcibly closed. It's more like a prediction market betting on the first-day close than a perpetual. Trade.xyz's IPOP directly converts to a standard stock perpetual and continues trading.
