The Auction¶

Energy Substantiation uses a daily auction to match supplier offers with investor demand.

Auction Schedule¶

The auction runs daily with these phases:

Offer Matching¶

When investors want to purchase tokens, their mint orders are matched against supplier offers.

How It Works¶

1. You create an offer with your maximum acceptable discount
2. The auction finds the clearing discount where supply meets demand
3. All selected suppliers receive the same clearing discount, which may be better than the maximum discount they offered

Discount Discovery¶

The token's Reference Price is calculated before the auction. What the auction discovers is the clearing discount.

• A 5% discount means offering at 95% of the Reference Price
• The auction starts with the highest discount and moves down
• Offers remain eligible when the clearing discount is at or below their maximum acceptable discount
• The clearing discount is the lowest discount needed to fill all demand
• All matched suppliers receive the clearing discount

Optimization Factors¶

The Dutch auction establishes one uniform clearing discount. The optimizer then determines how the eligible supply is allocated among suppliers and locations:

All selected suppliers receive the same clearing discount, but eligible suppliers are not necessarily selected equally—or selected at all. The optimizer may favor a supplier or location that improves credit quality or supply diversification.

Clearing Discount Example¶

Three suppliers submit offers:

Investor demand: 300 tokens

Result:

• Clearing discount: 5%
• Supplier A: Not matched (5% exceeds their 3% maximum)
• Supplier B: Matched at 5% (150 tokens)
• Supplier C: Matched at 5% (150 tokens, partially matched)

Supplier C benefits: their maximum was 7%, but they receive the better 5% rate. This simplified example illustrates discount clearing only; actual supplier allocation is determined by the optimizer and may differ to preserve diversification.

What You Receive¶

When your offer is matched with mint orders:

Spread = Reference Price × Clearing Discount × Years × Quantity
You Receive = Reference Price × (1 - Clearing Discount × Years) × Quantity

Burn Processing¶

When investors burn tokens, STRATA selects the receipts used for redemption.

Buy-Back Processing¶

Suppliers can voluntarily reduce their obligations through buy-backs.

Token Buy-Backs¶

• Processed before the mint phase
• Use tokens you own to retire obligations
• Discount is forfeited (applicable unaccrued spread goes to platform fees)

When to use: You acquired tokens through trading and want to reduce obligations.

USD Buy-Backs¶

• Processed during the mint phase
• Pay cash at reference price to retire obligations
• Discount is forfeited

When to use: You want to retire obligations but don't hold tokens.

Buy-Back Allocation¶

When a buy-back covers only part of your outstanding obligations, the platform automatically determines which receipts are reduced or retired. The results show which receipts were affected.

After the Auction¶

When your offer is matched with mint orders, the system generates a volumetric energy receipt for the matched quantity and sends it to an independent custodian. The custodian holds the receipt and verifies the physical commodity held by the supplier as bailee.

Auction Results¶

After each auction, you can review:

Next Steps¶

• Settlement - What happens after offers match with mint orders
• Spread - How spread revenue accrues
• Buy-Backs - Retiring obligations early