# Background

In the Pre-market phase, users encounter the unique challenge of holding tokens that are not yet tradable on public exchanges. This situation typically occurs during the Pre-TGE (Token Generation Event) period, a time marked by heightened anticipation and speculative activity, where market participants are keen on securing profits or acquiring tokens at perceived lower valuations.

Market participants in the Pre-market phase are primarily focused on two objectives:

* **Selling tokens before they are listed on public exchanges to secure potential profits.**
* **Buying tokens at pre-listing prices in anticipation of future gains.**

Traditionally, Pre-market trades are conducted through OTC (Over-The-Counter) transactions, where buyers and sellers negotiate directly or through intermediaries. However, this approach is fraught with challenges:

1. **Difficulty in finding a counterparty or intermediary:** 

Identifying suitable trading partners or reliable intermediaries can be a cumbersome and time-consuming process, often hindering the efficiency of Pre-market trading activities.

2. **Risks associated with the transaction:**

* **Middleman Fraud Risk:** The reliance on intermediaries increases the vulnerability to fraud. There is a heightened risk of middlemen absconding with the funds or tokens, compromising the security of the transaction.
* **Counterparty Default Risk:** In the absence of a robust mechanism to enforce the transaction, there is no guarantee that the seller will deliver the tokens upon their listing, which could lead to significant losses for the buyer.