The Hyperliquid Policy Center think tank, together with the trade[XYZ] platform, has submitted an official proposal to the U.S. Securities and Exchange Commission (SEC) aimed at transforming the traditional initial public offering (IPO) process. The initiative involves introducing a new class of derivatives — perpetual pre-IPO contracts (pre-IPO perpetual, IPOP).

The essence of the instrument is to provide an investor with price exposure to an issuer's shares before the official listing, without any rights to ownership of the securities, receiving allocations, voting, or other claims against the company. A key feature is that once public trading begins, the IPOP automatically ceases to exist, which eliminates the formation of a "permanent synthetic market" for private companies. This approach, in my view, solves the long-standing problem of pricing uncertainty at the pre-IPO stage.

As evidence of effectiveness, the letter's authors cite data from the first IPOP market on Cerebras, which lasted 13 days. They also note a troubling trend: the number of companies on U.S. exchanges has declined by 40% compared to the mid-1990s, underscoring the need to find new mechanisms for raising capital.

Practical results and examples

The document lists five completed IPOP markets on Hyperliquid, demonstrating the instrument's potential:

  • Cerebras — IPO price $185, opening at $350;
  • SpaceX — $135 and opening at $150;
  • SK Hynix — $149 and opening at $170;
  • ChangXin Memory Technologies (CXMT) — 8.66 yuan and opening at 49.5 yuan.

The SEC has been asked to consider five key blocks of issues: classification of the instrument, disclosure requirements, listing rules, measures to ensure market integrity, as well as a phased launch in the U.S. for different categories of investors with restrictions on leverage and position sizes. The usefulness of IPOP is particularly emphasized in direct listings, where there is no public price discovery mechanism.

It is worth noting that this proposal comes amid an active review of the regulatory framework: in June, the CFTC and SEC requested public comment on the definitions of swaps and other derivative instruments. This initiative could become an important step toward creating a more flexible and modern infrastructure for companies going public, but it will require careful consideration by the regulator.

My expert conclusion: The introduction of IPOP is a logical response to the stagnation of the traditional IPO market. However, the main challenge is ensuring a balance between innovative flexibility and the protection of retail investors. If the SEC approves the concept, we may witness a new era in private company financing, where crypto platforms serve as a bridge between traditional markets and digital assets.