Timing is often crucial when investors engage in cryptocurrency trading. Pre-trading offers investors a way to seize market opportunities before the official launch of a new token. It allows them to acquire popular tokens under more favorable conditions, potentially gaining a price advantage. This also helps investors adjust their portfolios ahead of possible market fluctuations.

To provide traders with more opportunities to participate in the market and lead innovation in crypto trading tools, Gate.io has launched Pre-Trading and PreMint features. This article will offer a comprehensive and in-depth introduction to the rules and operation of Gate.io’s Pre-Trading and PreMint, helping users better understand and utilize these features.

What is Pre-Trading?

Gate.io Pre-Trading is an over-the-counter (OTC) service that allows investors to buy and sell tokens before their official launch. Buyers and sellers can place and accept orders based on expected prices and quantities, enabling them to lock in their ideal token prices and amounts in advance, thereby achieving more flexible investment strategies.

For example, on the app, users can log into their Gate.io account, tap the avatar in the top left corner of the homepage to enter the navigation page, and then go to “Pre-Trading” in the trading section.

Source: Gate.io

1) If you are the seller, you first need to pay a certain amount of collateral using USDT from your account (the collateral rate is usually 100%; please check the specific token page for the exact rate). Then, through the “Create Order” feature, you can input your expected price and quantity for the new token to complete the order creation. The page will display the required collateral and transaction fees for this trade.

(Source: Gate.io)

Alternatively, you can directly browse the order market to find a preferred buy order and sell immediately at the buyer’s offer price. Once the transaction is completed, as the seller, you must ensure that your account has enough tokens for delivery within the settlement period. You will forfeit the entire collateral amount if you fail to fulfill the token delivery obligation by the settlement deadline.

(Source: Gate.io)

2) If you are the buyer, you need to use USDT from your account to pay for the transaction. You can use the “Create Order” feature to input your expected price and the quantity you wish to purchase, then place your order in the order market. The order creation page will also display the transaction fees required for this trade.

(Source: Gate.io)

Alternatively, you can directly find a suitable sell order in the order market and place your order at the seller’s price. Once the order is completed, you must wait for the settlement date to receive the new tokens. If the seller defaults, meaning they fail to deliver the tokens in full or on time, you will receive compensation from the seller.

3) If you need to view your current and historical orders, click the button in the top right corner of the token trading main page. On this page, you can also cancel any unfulfilled orders.

Source: Gate.io

It is important to note that all completed orders cannot be canceled, so traders should think carefully before placing an order. Additionally, the listing of tokens may be affected by various factors. If a token is delayed in listing, completed orders will still be valid, and traders just need to wait for the new settlement time. However, if a token’s listing is canceled, completed orders will be fully refunded, and unfulfilled orders will be canceled.

What is PreMint?

As mentioned earlier, pre-trading only allows traders to conduct over-the-counter peer-to-peer transactions, and liquidity in the spot market can only be realized once the token delivery is completed. So, is there a way for traders to trade in the spot market without waiting for the actual token to go live? Gate.io also offers a staking minting service called PreMint.

PreMint allows users to stake USDT to mint PreTokens. Successfully minted PreTokens serve as tokens for pre-trading. They cannot be transferred or withdrawn but can be freely bought and sold in the spot market.

PreMint consists of two core functionalities:

1) Minting PreTokens

Users mint an equivalent amount of PreTokens based on the amount of USDT they stake. These PreTokens can either be held until the settlement date or traded in the PreToken trading market. The minting fee is 0.

Taking the app as an example, users can enter the “Pre-Trading” page, click on “PreMint” in the bottom right corner, and choose to mint.

Source: Gate.io

After entering the page, input the staking amount to see the expected number of PreTokens you will receive. Once confirmed that the information is correct, click on “Mint” to proceed.

Source: Gate.io

Users who mint PreTokens must prepare sufficient actual tokens to complete the delivery by either depositing or directly purchasing the project tokens in the trading market within the settlement period. Once the delivery is successfully completed, the staked USDT will be refunded to the user’s account. If the delivery is not completed on time, the staked USDT will be forfeited.

2) Trading PreTokens

On the PreToken trading page, traders can directly buy and sell PreTokens.

In the Gate.io App, users can enter the “Pre-Trading” page, click on “PreMint” in the bottom right corner, and choose to trade.

After the settlement ends, the system will take a snapshot of users holding PreTokens and settle accordingly. After the settlement is complete, users who held PreTokens at the time of the snapshot will receive the actual tokens for delivery and the collateral from any users who defaulted on their delivery. It is important to note that in the aforementioned pre-trading, the quantity of tokens purchased can correspond to an equal amount of tokens received at the end of the settlement, or the seller’s default compensation. However, purchasing PreTokens does not guarantee an equivalent number of actual tokens; the final settlement amount depends on the actual tokens delivered by the minting users and the amount of default collateral, which introduces a significant level of uncertainty.

This means that if all minting users complete the delivery, holders will receive tokens equal to the amount they held at the time of the snapshot (if it is a points project, the token quantity will be converted according to the exchange ratio).

However, if there are minting users who default on their delivery, the holders will ultimately receive actual tokens and default collateral based on the snapshot data, proportionate to their holdings.

For example, user A, B, and C stake 10 USDT, 20 USDT, and 30 USDT, respectively, minting 5, 10, and 15 PreTokens, with a total staked amount of 60 USDT and a total of 30 PreTokens minted.

Subsequently, user A sells 5 PreTokens to user D on the PreToken spot market, while users B and C hold onto their tokens. At this point, the total staked amount remains 60 USDT, and the total number of minted PreTokens is still 30.

In the final settlement, users B and C successfully deliver 10 and 15 tokens, respectively, redeeming their staked amounts of 20 USDT and 30 USDT. However, user A fails to prepare the tokens, resulting in a failed delivery, and the platform must confiscate their staked amount of 10 USDT. At this point, the total default collateral is 10 USDT, and the total delivery quantity is 25 tokens.

Based on the snapshot data, the settlement results for users A, B, C, and D are as follows:

This means that user B will ultimately receive 8.33 actual tokens and 3.33 USDT, user C will receive 12.5 actual tokens and 5 USDT, and user D will receive 4.17 actual tokens and 1.67 USDT.

Additionally, if the token is delayed in listing, the minted orders will remain valid, and users just need to wait for the new settlement time. However, if the token’s listing is canceled, the system will take a snapshot and settle with users holding PreTokens, distributing the collateral among all PreToken holders based on their holdings.

Conclusion

With Gate.io’s pre-trading and PreMint features, users can enter the market early, gaining a competitive edge and trading flexibly based on real-time market conditions to optimize fund allocation. While this innovative approach offers more opportunities, it also carries risks. Users should fully understand the mechanisms and risks involved before participating and develop appropriate strategies to navigate the uncertainties of crypto trading.