The pricing controversy of Trade.xyz exposes the fatal weakness of Pre-IPO perpetual contracts

Author: Nancy, PANews

As players in the crypto circle share their SpaceX subscription orders on social media and express their joy at seizing this super IPO feast, Trade.xyz on Hyperliquid has fallen into a whirlpool of public opinion due to its pricing rules for the SPCX pre-market perpetual contracts, becoming a focal point of market controversy.

After the SPCX Pricing Controversy, Trade.xyz Faces a Trust Test

On June 10, Trade.xyz issued a statement formally responding to the recent pricing controversy surrounding the SPCX pre-market perpetual contracts.

According to the statement, Trade.xyz's IPOP contracts are a type of price-based perpetual contract, with the core goal of tracking the market's expectations for the price of Class A common stock per share, rather than reflecting the company's overall valuation. Therefore, information such as the company's total equity and market capitalization is not part of the contract rules, oracle pricing logic, or future contract conversion mechanisms. In other words, the SPCX price on Trade.xyz is closer to an indicator reflecting market sentiment and trading expectations, rather than a theoretical stock price calculated based on the company's fundamentals.

Trade.xyz also mentioned that early product documentation provided some educational examples demonstrating how users could derive a reasonable per-share price based on their own judgments of the company's valuation and total equity. Although this content was only intended to help understand the product mechanism, some users mistakenly believed that the platform itself would price based on market capitalization or equity data. As a result, the relevant examples have now been removed from the official documentation.

The statement emphasized that Trade.xyz will not use, disclose, or rely on the number of shares or market capitalization as a pricing benchmark for SPCX or any other XYZ market.

The trigger for this controversy came from the latest SpaceX prospectus disclosed a few days ago. The document revealed that SpaceX's actual total equity is 13.08 billion shares, approximately 10% higher than the 11.87 billion shares that the market had long used. This means that, assuming the company's overall valuation remains unchanged, the theoretical price per share for SpaceX needs to be adjusted downward by about 10%.

After the news was released, several centralized exchanges (CEX) chose to suspend trading of related contracts and resumed trading after repricing based on the new equity data. However, Trade.xyz insisted that its product logic does not rely on equity data, and therefore did not adjust its pricing framework accordingly. The two pricing systems also triggered a wave of cross-platform arbitrage, quickly pushing Trade.xyz into the spotlight of public opinion.

Regarding how to resolve this discrepancy in the future, Trade.xyz stated that once SpaceX officially completes its IPO and sufficient external trading data is formed in the public market, SPCX will switch to a standard external oracle pricing mechanism, at which point the contract price is expected to gradually converge to the actual trading price of SpaceX stock in the public market.

Feedback from some community members

However, this clarification further ignited market controversy. Many users believe that in the early stages of the product launch, Hyperliquid did not adequately and clearly disclose the contract rules, and the UI interface and official documentation contained descriptions that could easily lead to misunderstandings for a long time. It was only close to the IPO and after the controversy erupted that the platform hurriedly issued a clarification announcement and modified the document content, which is hard to convince.

The greater dissatisfaction comes from users' real monetary losses. Due to the HIP-3 mechanism itself lacking the Rebase capability of traditional exchanges, when the market repriced according to SpaceX's latest equity, the SPCX contract price could only passively adjust downward. As a result, the value of long positions shrank by about 10% in a short time, and many users using high leverage were forced to close their positions or even face liquidation, with these losses directly converting into profits for shorts and arbitrageurs.

From the perspective of these users, the platform not only failed to express sufficient concern for the affected users but also did not propose any compensation or mitigation plans, instead responding with "the product mechanism is like this," which felt very indifferent and lacking in responsibility.

In a sense, this discussion around SPCX pricing rights also provides a reference case for the design and rule disclosure of more on-chain Pre-IPO assets in the future.

The Rebase Dilemma Awaits Resolution, On-chain Pre-IPO Faces a Major Test

For Perp DEX, lacking Rebase capability means that any Pre-IPO asset encountering actions common in traditional stock markets, such as stock splits, new issuances, or dividends, could lead to instant revaluation of contract prices, triggering large-scale chain liquidations and unfair losses, as well as undermining user trust in the platform.

To understand the importance of Rebase, one must first understand what Rebase is and why it becomes a key component in the design of Pre-IPO perpetual contracts.

Simply put, Rebase is a value-neutral adjustment mechanism. The platform synchronously adjusts contract prices and user position quantities by the same proportion, ensuring that the overall value of traders' positions remains roughly unchanged before and after the adjustment. This mechanism is necessary because, during the Pre-IPO phase, a company's actual total equity is usually not publicly disclosed, and exchanges can only design the initial price and multiplier of contracts based on market estimates of equity. When a company formally submits S-1/S-1A documents and discloses the actual equity, if there are discrepancies with the estimates, Rebase is needed to calibrate contract parameters. Otherwise, contract prices will gradually deviate from the true per-share value, creating opportunities for cross-platform arbitrage and forcing unilateral position holders to bear losses passively.

However, compared to CEX, achieving Rebase in Perp DEX is more challenging.

Specifically, CEX relies on centralized databases and professional risk control teams to quickly suspend trading after company actions (such as equity issuance or stock splits) occur, uniformly adjust all user positions, and then resume market trading. The entire process is completed by the exchange's backend, allowing users' nominal position values to remain smooth and continuous. However, even for large CEXs with mature trading systems and professional technical teams, such Rebase operations involving synchronized adjustments of all market positions remain a complex undertaking.

Moreover, Perp DEX's matching, clearing, and position statuses all operate on smart contracts, making it impossible to directly modify data like CEX. To achieve a similar Rebase effect, additional monitoring logic, special hooks, or upgrade contract mechanisms often need to be designed, which not only increases gas costs and system complexity but also expands the potential attack surface, bringing new security risks.

In addition, Rebase may further amplify the liquidity fragmentation issues that already exist in decentralized markets. The same Pre-IPO asset may exist on multiple DEXs simultaneously, each with limited market depth, and LPs (liquidity providers) facing the additional uncertainty brought by Rebase may also reduce their willingness to invest, ultimately leading to decreased liquidity, increased slippage, and further deterioration of the trading experience.

Of course, Rebase is not completely unachievable in a decentralized architecture. Some community users pointed out that, for example, Aster has already completed similar asset Rebase adjustments, indicating that the real challenge does not lie in DEXs being inherently unable to support it, but rather in whether the platform is willing to design additional mechanisms for this and bear the development and operational costs that come with it.

In contrast, Trade.xyz, in addition to adhering to a more market-oriented pricing philosophy, relies on the HIP-3 architecture that allows developers to independently deploy their own Perp markets. Although this model inherits Hyperliquid's high-performance order book system, each market has completely independent contract specifications, oracle definitions, and parameter settings, lacking unified Rebase native support at the platform level, making it difficult to easily implement bulk adjustments for all positions. However, some community members have revealed that Trade.xyz is researching corresponding solutions for potential special events such as stock splits that may occur in the future.

From a longer-term perspective, the pricing issues exposed by SPCX reveal not only a product design flaw but also the real challenges that current Perp DEXs must face in exploring RWA assets. As more Pre-IPO assets are mapped on-chain in the future, whether on-chain Pre-IPO perpetual contracts can establish a sufficiently reliable price discovery mechanism before the formation of public market prices, withstand the tests of real company actions and information disclosures, or evolve into a capital game detached from fundamentals, remains to be verified by time and the market.