Pre-IPO FAQ

A pre-IPO asset provides economic exposure to a private company. Unlike public stocks, private companies do not trade on public exchanges and are generally only accessible to institutional investors, employees, founders, and certain accredited investors. Pre-IPO assets provide a way to gain exposure to the performance of these companies before they become publicly traded.

Pre-IPO asset prices are determined by market supply and demand. Prices may be influenced by: - Company performance - Private funding rounds - Investor sentiment - Industry trends - Expectations regarding a future IPO or acquisition As a result, prices can be volatile and may differ from recent private funding round valuations.

Pre-IPO asset prices stay close to underlying market values through arbitrage. When onchain prices run high, arbitrageurs can buy exposure offchain, mint assets onchain, and sell them for a profit. That adds supply and pushes the onchain price down. When onchain prices run low, arbitrageurs can buy assets onchain and redeem them for the higher offchain value. That removes supply and pulls the onchain price up. Together, these incentives help keep onchain prices in line with real-world prices.

Issuers may provide third-party attestation reports—published periodically or made available on request—to confirm that outstanding assets are fully backed. You can compare the total supply in circulation to the figures in those reports.

Implied valuation represents the company valuation implied by the current asset price. Many investors use implied valuation to compare private companies with previous funding rounds, public market peers, and historical valuations. Implied valuation is often a more useful metric than the asset price itself when evaluating a pre-IPO investment.

If a company completes an IPO, the treatment of a pre-IPO asset depends on the issuer and the structure of the asset. In some cases, the asset may continue trading. In other cases, conversion, redemption, or other actions may occur. Refer to the asset page for information specific to a particular company.

Following an IPO, underlying shares are often subject to lockup restrictions. During a lockup period, certain shareholders may be restricted from selling their shares for a period of time. Because of these restrictions, a pre-IPO asset may temporarily trade at a premium or discount relative to the public stock price. As lockup restrictions expire, those differences may narrow.

A lockup period is a common restriction that applies after an IPO. Lockups are designed to prevent large numbers of shares from entering the market immediately after a company becomes public. Most lockup periods last several months, though the exact terms vary by company.

Pre-IPO investments involve significant risk. Risks may include: - Company underperformance - Delayed or cancelled IPOs - Reduced liquidity - Market volatility - Regulatory changes - Loss of some or all invested capital Pre-IPO assets should be considered speculative investments.

Each asset page contains information specific to that company, including pricing information, valuation metrics, and any issuer-provided disclosures that may affect the asset.