Author: Jae, PANews

On June 12, SpaceX, the globally anticipated commercial spaceflight giant, is set to make history with its IPO on Nasdaq. While traditional capital markets await the IPO bell, the crypto market has already begun a real-world pricing exercise surrounding SpaceX's valuation.

With the innovative financial derivative of Pre-IPO perpetual contracts, the IPO saga of SpaceX, a trillion-dollar company, has begun ahead of schedule. As SpaceX disclosed its latest S-1A filing, the mismatch between the actual share capital and the initial estimated share capital has caused disagreements among major cryptocurrency exchanges regarding rebase rules, thus opening a cross-platform arbitrage window with price differences reaching as high as 10%.

With the same target and the same IPO expectations, different trading platforms launched a business war, and the lack of uniformity in the rules gave rise to an arbitrage feast.

The battle among exchanges over pre-IPO contracts was ignited by SpaceX's amended IPO filings.

The main conflict in this commercial battle between cryptocurrency exchanges over the SPCX Pre-IPO contract lies in the "dilution of the value of the underlying equity."

The initial pre-IPO contracts for SpaceX that were listed on major trading platforms were generally designed and priced based on the market's estimated initial share capital of 11.87 billion shares.

However, the first revised version of SpaceX's S-1A filing submitted on June 1 was like a bombshell: data showed that after the share issuance, SpaceX's actual total share capital changed to 13.08 billion shares, an increase of about 10% compared to the initial estimate.

An increase in share capital means that the implied value per share is diluted, which directly leads to the same choice for major trading platforms: whether to modify the contract rules to converge to the true price per share (Rebase), or to maintain the status quo until listing.

Faced with this change, the major trading platforms reacted in very different ways:

Binance: Taking a step-by-step approach to trigger the Rebase mechanism.

Last night (June 8), Binance issued a Rebase announcement, stating that it will convert SpaceX's pre-IPO contracts at a ratio of 1.1 to align with the diluted actual equity value.

In fact, Binance's Rebase action was already foreshadowed.

On May 21, when Binance launched the SpaceX Pre-IPO contract, it warned in its announcement that the actual number of shares after listing may differ from the estimate, and reserved the right to rebase the contract.

On May 29, Binance released a document explaining the IPO rebase rules, promising that adjustments would be triggered if the number of shares deviated by more than 3%.

On June 3, after SpaceX delivered the updated S-1A document, the stock deviation was far greater than 3%, and Binance had a very high probability of rebase.

On June 4th, Binance released a Chinese version of the document. This series of actions sent a strong signal to the market, indicating that Binance is internally discussing and preparing a rebase solution.

Ultimately, Binance decided to implement Rebase tomorrow (June 10), attracting the attention of a large amount of arbitrage funds.

OKX: Acted first and completed a large-scale rebase ahead of schedule.

On June 2, OKEx executed a rebase of up to 12.52 times on its SpaceX pre-market contracts. After the adjustment, the actual total outstanding shares corresponding to the SpaceX pre-market contracts on OKEx were 12.52 billion shares.

Although it appears to differ from the actual total share capital of 13.08 billion shares disclosed in the S-1 filing, it does not actually affect the individual stock price.

According to PANews' investigation, the 12.52 billion shares represent SpaceX's Basic Shares Outstanding, which only includes the common and preferred shares that will be officially issued and are listed on the shareholder register; the 13.08 billion shares represent its Fully Diluted Shares, which includes not only stocks but also unexercised options, convertible bonds, warrants, and other equity holdings under the Employee Stock Ownership Plan (ESOP).

Essentially, the two methods do not affect the final price mapping; only the calculation methods differ.

Trade.xyz (Hyperliquid): Rejects Rebase, Market-Based Pricing

Unlike the two centralized exchanges (CEXs), Trade.xyz, an RWA Perp DEX built on the Hyperliquid HIP-3 market, takes a different approach. Its official documentation explicitly emphasizes that the SPCX contracts on the platform track the price of SpaceX's actual Class A common stock and includes numerous disclaimers stating that "rebase will not be performed."

Following the revision of SpaceX's S-1A filings, the SPCX contract price on Trade.xyz dropped by approximately $15 directly through market mechanisms, effectively pricing itself out equity dilution ahead of schedule.

As a result, a rather dramatic scene unfolded in the market, with three different pricing logics appearing on the three trading platforms: for the same SpaceX, Binance was about to rebase, OKX had already rebased, while Trade.xyz silently refused to rebase.

It was this divergence in rules that laid the groundwork for the cross-platform arbitrage opportunities that followed.

A Feast for Smart Money: How is Cross-Platform Arbitrage Achieved?

The fragmentation of rules often creates a breeding ground for arbitrageurs. In this game, crypto "smart money" has seized a rare, certain alpha opportunity in the market.

Before Binance confirmed the implementation of the 1.1x rebase, the market was in a state of mispricing for a long time. Because Trade.xyz had completed its dilution pricing in advance, while Binance was still trading on its old share capital, the prices of the two companies deviated significantly at one point, with the SPCX price on Trade.xyz even being 20 basis points higher than that on Binance at one point.

Following SpaceX's updated S-1A filings, Binance confirmed the implementation of a 1.1x rebase, triggering a low-risk arbitrage window of up to 1,000 basis points in a short period of time due to pent-up pricing discrepancies.

The logic behind this arbitrage strategy is not complicated: Binance will perform a rebase, while Trade.xyz will not. Therefore, just before the rebase, the prices on both sides converge to the same level. However, after Binance completes its adjustment, its contract price will be recalculated at a 1.1x ratio, while the price on Trade.xyz will not change synchronously, creating a natural arbitrage opportunity between the two.

For example: Suppose that both Binance and Trade.xyz's SPCX were quoted at $170 before the rebase. After the 1.1x rebase, Binance's open interest increased by 10%, corresponding to a price drop to approximately $154.55. Meanwhile, Trade.xyz's SPCX price remained anchored at around $170. Thus, a price difference of over 10% naturally formed between the two.

For arbitrageurs, this means they can establish a long position on Binance and an equivalent short position on Trade.xyz, waiting for the prices to eventually converge, thus locking in the profit from the price difference.

A similar arbitrage logic applies between CEXs. An arbitrageur can go long 1 unit of SPCX on Binance at $170, and simultaneously short 1.1 units of SPCX on OKX (which has already undergone rebase) at $160. After Binance completes its rebase, the long position will automatically adjust to 1.1 units, and the price will be divided by 1.1. As long as the "Binance price / OKX price ratio" is less than 1.1, the arbitrageur will still profit.

The brilliance of this approach lies in the fact that arbitrageurs achieve Delta neutrality through their hedging positions on two CEXs. Regardless of the price level at which SpaceX's IPO falls, the contracts on both sides will eventually converge to the same price, allowing arbitrageurs to reliably capture a guaranteed profit of over 3% in the middle.

However, with Binance's announcement of Rebase and the influx of arbitrage funds, the price differences between different trading platforms are being continuously narrowed, and profit margins are gradually shrinking. This arbitrage feast is also nearing its end.

Looking back at the whole event, the real arbitrage opportunity wasn't created by SpaceX itself, but by different platforms applying different rules to the same event. When the pricing rules for an asset diverge across different platforms, new alpha opportunities can emerge.

SpaceX's "largest IPO in history," even before listing on traditional capital markets, has already provided the crypto market with a classic case of arbitrage, once again demonstrating the market's keen sensitivity to information and expectations. With the Nasdaq bell ringing on June 12th, the real pricing battle is just beginning.

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