We don’t build decentralized futures by recreating Wall Street’s backrooms on a blockchain exchange. Yet here we are—Bybit, one of the largest crypto derivatives platforms, has just added Unitree Robotics and Moonshot AI to its Pre-IPO perpetual contract lineup. Two Chinese tech darlings, one a humanoid robot maker valued at over $1 billion, the other an AI startup racing to build the next generation of language models. The headlines are bullish: “Exposure to unicorns before they go public.” But peel back the layer of marketing, and you’ll find something far more fragile—a price feed that is not a signal, but a story.
I first encountered this tension in 2017, when I spent 150 hours tracing the reentrancy vulnerability in The DAO’s smart contract code. I was a 20-year-old computer science undergraduate in Nairobi, obsessed with the idea that code could be law. But after that hack, I realized that code is only as strong as the assumptions it rests on. The DAO assumed that the call function would not be reentered. Bybit is assuming that the price of a private company can be discovered through sporadic funding rounds and media whispers. Both assumptions are dangerous.
Context: The Pre-IPO Perpetual Contract
A Pre-IPO perpetual is a derivative that tracks the valuation of a company that hasn’t yet gone public. It’s a synthetic exposure: you buy a contract whose price is supposed to mirror the company’s equity value, using a funding rate mechanism to keep the contract price anchored to the “spot” price of the private shares. The problem? There is no continuous spot market for private company equity. These shares trade on secondaries like Forge Global or EquityZen, but volumes are thin, transactions are discrete, and prices are often based on the last funding round—which could be months old.
Bybit is not the first to play this game. BitMEX launched Pre-IPO perpetuals for SpaceX, Stripe, and Anthropic earlier in 2024. The market is small, but growing. The attraction is obvious: retail traders who cannot access venture capital can now bet on the next big thing before it hits the public market. The fee revenue for exchanges is a nice bonus. But the technical reality is far messier.
Core: The Price Discovery Problem
Let me state this clearly: Pre-IPO perpetuals are not trading on reality; they are trading on narrative. The mark price for these contracts must be derived from fragmented, low-frequency data sources. The funding rate, which is supposed to align the perpetual price with the underlying asset, cannot rely on the usual arbitrage mechanism because there is no liquid spot market to arbitrage against. The result is a derivative that is detached from any robust price anchor.
I’ve spent years studying price feeds. During the 2020 DeFi Summer, I forked Curve Finance’s stableswap invariant and spent 200 hours simulating impermanent loss scenarios. I learned that the hardest part of any financial product is not the math—it’s the oracle. When the price feed breaks, the protocol breaks. Here, the price feed is broken by design.
The mark price is a story, not a signal. Bybit likely uses a combination of private market data from sources like PitchBook or Crunchbase, along with periodic updates from secondary trading platforms. But these are not real-time. A funding round might close at a $1 billion valuation, but if the company raises a new round six months later at $2 billion, the price jumps. In between, the perpetual contract might drift wildly, driven by speculation rather than fundamental value.
This is not just a theoretical problem. In a traditional perpetual, the funding rate incentivizes traders to bring the perpetual price back to the spot price. But if the spot price is itself a fiction—a point estimate derived from a single transaction—then the convergence is meaningless. The contract becomes a game of hot potato, where the last holder before the next funding round gets burned.
There is also the risk of IPO failure. If the company never goes public, what happens to the contract? Bybit might settle it at a negotiated price, or simply expire it. But that creates a massive uncertainty: the contract’s value is completely dependent on the exchange’s discretion. We are back to the old world of trust, not the new world of trustlessness.
Contrarian: The Pragmatic Test
Now, let me play the contrarian. Some argue that Pre-IPO perpetuals are a natural evolution of crypto derivatives. They offer retail traders exposure to high-growth private companies that were previously reserved for institutional investors. Isn’t that democratization? Isn’t that what crypto is supposed to be about?
I’d answer: yes, but only if the product is built on a foundation of truth. The bear market didn’t kill innovation; it killed the lies. We saw that in 2022 when Terra collapsed because its algorithmic stablecoin was built on a circular dependency. We saw it when FTX failed because it pooled customer funds with its own trading desk. The lesson is that financial products that rely on obscure price feeds and opaque governance are not resilient—they are time bombs.
The blind spot here is the assumption that centralized exchanges can solve the pricing problem. Bybit is a competent exchange. Its matching engine is fast, its liquidity is decent. But it cannot conjure a transparent price out of thin air. The very nature of private company valuation is subjective, negotiated, and often confidential. No exchange can algorithmically derive a fair price from that.
Some might argue that this is a stepping stone: as more companies go public, the data will improve. But that’s a bet on the future, not a solution for the present. And in a bear market, where survival matters more than gains, traders need to know if their assets are safe. The answer for Pre-IPO perpetuals is: they are not safe, because the price you see is not the price you get.
Takeaway: The Horizon
I’ve been in this space long enough to know that financial engineering will always push boundaries. Bybit’s Pre-IPO perpetuals are not evil; they are experiments. But experiments must be judged by their outcomes, not their intentions.
I suspect that within 18 months, we will see a court case over a wrong price settlement on one of these contracts. The technology will be blamed, but the fault will be in the design. The question is not whether Bybit can offer these products—it’s whether we, as a community, will accept them as part of our ecosystem.
About me: I’m Chris Thompson, a decentralized protocol PM based in Nairobi. I grew up in a world where trust was scarce, and I learned that the best financial systems are those that minimize the need for trust. Pre-IPO perpetuals maximize trust—trust in the exchange, trust in the data source, trust in the settlement process. That is not the future I want to build.
We don’t have to accept every new product that lands on our screens. We can ask: does this increase transparency? Does this reduce reliance on intermediaries? If the answer is no, then maybe we should walk away.
The bear market didn’t teach us to stop innovating. It taught us to build with integrity. And integrity demands that we admit when a price is a fiction.