Market design

How the market works

Silicon Exchange runs compute as a physical commodity — modeled on the electricity market. Sellers offer delivered capability and buyers bid for it; the operator clears each auction to a single transparent price, builds a reference index from the cleared trades, and a central counterparty guarantees settlement. NACCO owns no silicon and takes no position — it runs the venue, certifies the grade, and clears the trade.

The market lifecycle

1 · Register & certify

Suppliers register facilities and silicon; an independent grade assay certifies each unit's reproducible performance band. Only active, certified silicon can be offered.

2 · Contract ahead

Monthly capacity and bilateral forwards are traded in blocks (base / on-peak / off-peak), registered and sealed so the same unit-window can never be double-sold.

3 · Day-ahead auction

The day before delivery, an hourly auction collects bids and offers per zone × node × grade × hour — the granular price-formation layer.

4 · Clear to one price

The operator runs a uniform-price auction: quality-first ordering, a single clearing price per grade, partial fills on the margin. Everyone pays/receives the same clearing price.

5 · Publish the reference

The hourly clearing prices become the reference price; their average builds the published reference index, plus the grade basis to the Grade-REF base unit.

6 · Meter & settle

Delivery is metered hourly. Two-settlement: schedule at the day-ahead price, then settle metered deviations ex-post against the same reference. The CCP moves the money.

The unit & the grades

The traded unit is SPH — measured-effective PFLOP-hours, the continuous-flow "MWh of compute." Hedgers also quote in certified GPU-hours derived from SPH. Capability is graded into a deliberately small set of performance bands to protect liquidity; every grade settles at a basis to the Grade-REF base unit.

The grade assay certifies a reproducible, cross-substrate grade — not a universal correctness oracle. See the standard.

Grade-REF
Reference grade — the base unit against which all others settle.
basis
1
Grade-A
Current flagship data-center class.
basis
0.95
Grade-B
Prior-generation class.
basis
0.75
Grade-C
Inference-class.
basis
0.5

Timeframes

Monthly capacity & forwards (traded as blocks) set the hedge; the day-ahead hourly auction is the reference; hourly metering plus ex-post deviation settlement closes the physical position. There is no live real-time market — compute has no reliability driver, so the day-ahead reference is the real-time reference.

Price formation

Every auction is a uniform-price batch auction, not a continuous order book. Offers rank low-to-high, bids high-to-low, they cross, and the marginal accepted offer sets one clearing price for the grade. Quality-first ordering gives higher grades priority and their own clearing price.

Clearing house (CCP)

Cleared trades are novated to NACCO as central counterparty. It manages initial + variation margin, a mutualized default fund with a loss waterfall, credit limits and health scoring, and a physical-delivery-default remedy (penalty + alternate routing). It guarantees settlement; it never takes a market position.

Who participates — by member class

Membership is segmented into five sector classes, each with a seat on its own governance committee and a distinct way of interacting with the market. Licensing is per sovereign zone.

Buyer / Load

AI labs, enterprises, and inference providers — the demand side seeking price certainty and guaranteed delivery.

In the market: Buys compute capability (bids) for delivery over a window.

Portals
Demand Market Day-Ahead Risk Settlements
  1. Step 1
    Apply for a buyer license in a zone
  2. Step 2
    Register demand resources & flexibility
  3. Step 3
    Bid into capacity / day-ahead auctions or sign a forward
  4. Step 4
    Take delivery against the cleared schedule
  5. Step 5
    Settle at the day-ahead reference; pay deviations ex-post

Supplier / Seller

Clouds, neoclouds, data-center operators, and GPU owners — the supply side seeking offtake and utilization.

In the market: Sells delivered capacity (offers) from certified, active silicon.

Portals
Registry Market Day-Ahead Risk Settlements
  1. Step 1
    Apply for a supplier license in a zone
  2. Step 2
    Register facilities (nodes) and silicon
  3. Step 3
    Run the grade assay → certify → place in service
  4. Step 4
    Offer capacity into capacity / day-ahead auctions
  5. Step 5
    Deliver, get metered, and receive settlement + revenue

Infrastructure / Power

Data-center landlords and power producers — the behind-the-meter power↔compute link.

In the market: Offers capacity backed by power and facility interconnection.

Portals
Registry Market Day-Ahead
  1. Step 1
    Apply for an infrastructure license
  2. Step 2
    Register facilities and interconnection status
  3. Step 3
    Back supply with power / behind-the-meter capacity
  4. Step 4
    Coordinate outages so availability is accurate
  5. Step 5
    Participate in reliability and siting governance

Financial / Liquidity

FCMs, market makers, speculators, and lenders — providing liquidity, taking price risk, financing capex.

In the market: Takes either side for liquidity and hedging — bids and offers.

Portals
Market Day-Ahead Risk Settlements
  1. Step 1
    Apply for a financial-member license
  2. Step 2
    Post collateral and manage credit limits
  3. Step 3
    Provide liquidity on both sides of the book
  4. Step 4
    Hold cash-settled index positions vs. the reference
  5. Step 5
    Mark positions, meet margin, settle variation margin

Public Interest / Independent

Academics, consumer/reliability advocates, and independent technologists — protecting neutrality and systemic reliability.

In the market: Does not trade — an independent voice for neutrality and reliability.

Portals
Governance Reference Rulebook
  1. Step 1
    Apply for a public-interest seat
  2. Step 2
    Review the rulebook and market data
  3. Step 3
    Vote on its sector committee
  4. Step 4
    Monitor surveillance and reliability outcomes
  5. Step 5
    Advise the board on neutrality and systemic risk

Full governance, committees, and voting weights are on the governance page; the binding rules are in the rulebook.