Pre-market Perpetual Contracts – Help Center

1.Overview

Kai Exchange's Pre-Market Trading allows users to trade perpetual contracts for tokens that have not yet been officially launched. These pre-market perpetual contracts are USAD-margined by nature. Once the tokens are listed on relevant spot exchanges, these contracts will transition into standard perpetual contracts.

Compared to regular perpetual contract markets, the pre-market trading market has unique mechanisms and considerations. Please ensure you fully understand the product mechanisms and risks associated with pre-market trading before participating.

2.Product Mechanisms

2.1 Price Mechanism

2.1.1 When Token Prices Are Available as Index Prices

The pre-market contract trading market adopts a dual-price mechanism consistent with the regular contract market.

Index Price: Pre-market spot price
Mark Price: Median value (Price 1, Price 2, Latest Transaction Price)

Price 1 = Index Price × (1 + Funding Basis Rate)

Funding Basis Rate = Funding Rate × (Time to Next Funding Fee Payment / Funding Fee Interval)

Price 2 = Index Price + 5-Minute Moving Average 5-Minute Basis Moving Average = Moving Average [(Best Bid + Best Ask) / 2 − Index Price]

2.1.2 When Token Prices Are Unavailable as Index Prices

In extreme market conditions, Kai Exchange may not be able to obtain a reasonable spot price from any exchange (including its own platform). In such cases, to ensure the rationality of the index price, the index price will be calculated based on the latest transaction price of the perpetual contract.

Calculation Formula The index price is determined based on the target price captured every second over the past 10 seconds.

The formula for the index price at time

Tn is: Index Price at Tn = α × Target Price at Tn + (1−α) × Index Price at T(n-1) Where α is 0.1818, and the platform may adjust this value based on market conditions.

Target Price Calculation The target price for the perpetual contract is calculated every second under the following scenarios:

No Buy/Sell Orders: Target Price = Latest Transaction Price
With Buy/Sell Orders: Target Price = Adjusted Depth-Weighted Mid Price

Adjusted Depth-Weighted Mid Price Calculation The calculation involves the following steps:

a. Calculate the Premium Index Base Volume

b. Compute the Depth-Weighted Bid and Ask Prices

c. Ensure the Rationality of the Adjusted Depth-Weighted Mid Price

d. Calculate the Adjusted Depth-Weighted Mid Price

2.1.3 Transition from Extreme Market Index Price to Regular Index Price

When the pre-market contract market can obtain token prices as index prices, it will automatically transition to the regular perpetual contract market.

Price Smooth Transition Plan: A 120-second smooth transition period is applied between the extreme market index price (A) and the index price obtained from other exchanges (B).

The transition is divided into 120 one-second intervals.

After the transition, the index price will fully switch to the index price from other exchanges, and the mark price will also adopt the calculation method of regular perpetual contracts.

2.2 Price Limit Rules

Minimum Buy Price = Mark Price × (1 - 15%)
Maximum Sell Price = Mark Price × (1 + 15%)

2.3 Funding Rate

These markets will use the same funding rate calculation formula as perpetual contracts, with a 4-hour settlement cycle. Note that funding rates may vary based on market dynamics.

2.4 Fee Structure

The fee structure is the same as standard perpetual contracts.

2.5 Position Limits and Tiered Margins

Note: The maximum position limit is denominated in USAD, with a market cap of 50,000 USAD.

2.6 Liquidation Mechanism

The liquidation mechanism for pre-market perpetual contracts is the same as regular perpetual contracts.

2.7 Risk Disclosure

Due to the high-risk nature of pre-market trading, these markets are more prone to low liquidity, high volatility, and increased liquidation risks. Therefore, compared to regular perpetual contracts, these markets face a higher risk of auto-deleveraging.

If the new token is successfully launched and listed on Kai Exchange's contract market, the contract will transition to a regular perpetual contract, and adjustments to risk limits will be announced separately.
If the project cancels the token launch or Kai Exchange decides not to list the token due to risk control issues, the contract may be delisted in advance, with specific dates announced via official notice.

The final interpretation of this product belongs to Kai Exchange.