On September 25, 2024, Binance launched the pre-market trading feature. However, this is a relatively late time for Binance to add this type of trading. So where does the advantage of Binance pre-market come from? Let’s explore Binance pre-market with Insights in this article.
What is Binance Pre-Market?
Binance pre-market is a product that allows users to trade tokens that are about to be listed on Binance early. According to the project team, the tokens supported by Binance pre-market all come from the Binance Launchpool product.
The purpose of Binance pre-market is to expand the use cases for Binance Launchpool, while also providing users with a new financial tool on the Binance ecosystem.
Currently, Binance pre-market has only officially opened on September 25, 2024, so this product does not yet support any assets for users to trade.
Learn more: What is pre-market trading?
Guide to Participating in Binance Pre-Market
Here are the steps to participate in Binance pre-market:
Step 1: Register a Binance account.
To receive a 100 USDT discount on trading fees, register an account using the link below:
Note: After downloading and successfully registering a Binance account, users need to complete KYC.
Read more: Guide to creating and KYC-verifying a Binance account.
Step 2: On the homepage interface, select Trade at the bottom of the screen.
Step 3: Then, users switch to the Spot section and click the arrow in the left corner of the screen.
Step 4: Finally, users select Pre-market.
Binance Pre-Market Process
As mentioned above, Binance pre-market only applies to assets from Binance Launchpool. Accordingly, the complete process for a token from Binance Launchpool to Binance pre-market is as follows:
- First, when a token is launched on Binance Launchpool, users need to subscribe with a certain amount of BNB or FDUSD.
- Then, tokens from Binance Launchpool are distributed to users’ accounts based on the number of assets subscribed.
- At the end of the Launchpool period, the tokens returned to the wallet cannot be withdrawn from Binance or used for other purposes such as Earn, Futures, or Margin.
- The Pre-market period begins.
- Users can buy more or sell tokens received from Binance Launchpool in advance.
- At the end of the Pre-market period, the assets purchased during pre-market will be converted 1:1 into spot assets for users to trade on Binance Spot.
- Also, orders in pre-market will be automatically canceled when the pre-market period ends.
In general, Binance pre-market trading is similar to Binance Spot, and even the asset conversion rate is equivalent (1:1).
So What is the Difference Between Binance Spot and Binance Pre-Market?
The difference between Binance Spot and Binance pre-market lies in the liquidity of the project. During the spot trading phase, the value of the token when listed depends on many factors such as market conditions, the number of tokens that Binance holds on the exchange, and many other factors.
In contrast, the value during the pre-market phase entirely depends on the community, leading to a difference in valuation compared to Binance Spot. Moreover, pre-market is often known for its lower liquidity when assets are listed on the exchange, causing the value of tokens during the pre-market phase to always fluctuate greatly.
Comparing Binance Pre-Market with Other Pre-Market Exchanges
The pre-market trading model emerged in early 2024, bringing significant opportunities for investors like TIA and PYTH. This led to a series of projects and platforms launching pre-market features to attract users, with prime examples being Whales Market, Aevo, and Bybit.
Although Binance’s pre-market feature launched quite late (Q3/2024) compared to its competitors, Binance pre-market still has competitive advantages over other pre-market products, including:
- Low trading fees: When trading pre-market on Binance, users only incur Binance’s spot trading fees. These range from 0.012% to 0.01%. Meanwhile, other exchanges typically charge between 2% and 2.5%.
- Easy accessibility: On Binance pre-market, users simply need to buy assets in the pre-market section and wait for Binance to convert them 1:1 when the token is listed on the spot market. However, with other pre-market exchanges, investors have to collateralize assets to participate in buying and selling, or trade pre-market in the form of futures contracts.
The reason for this is that Binance pre-market only allows users to trade tokens distributed from Binance Launchpool.
On other pre-market exchanges, platforms cannot control the token supply and the number of tokens held by investors. This leads to sellers having to collateralize assets to ensure timely payment when the token undergoes Token Generation Events (TGE), or using pre-market trading through futures contracts.
However, the disadvantage of Binance pre-market is that it supports fewer assets, as the number of projects depends on Binance Launchpool. In September 2024, Binance Launchpool only listed 3 projects, and in August 2024, it only listed 1.
On other pre-market exchanges, the number of projects supported is much higher. For example, Whales Market currently supports trading 10 projects per month, and Kucoin pre-market supports 5 projects per month.
Read more: Top 5 pre-market platforms in the crypto market
