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Settlement

This page explains how settlement works for suppliers on the Energy Substantiation platform.

Overview

Settlement occurs in two scenarios:

  1. Offer Settlement - When your offer matches and you receive payment
  2. Burn Settlement - When tokens are burned against your fills

Offer Settlement

When your offer matches at the daily auction:

What Happens

  1. Fill Created - A fill record is created with your terms
  2. Payment Credited - You receive payment to your internal balance
  3. Spread Held - Financing spread is held in a separate account
  4. Obligation Recorded - Your reserve balance reflects the new obligation

Payment Calculation

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

Timeline

Day Event
T+0 Auction matches your offer
T+1 Payment credited to internal balance
Ongoing Financing accrues over the financing duration

Example: Offer Settlement

Field Value
Reference Price $100
Quantity 1,000 tokens
Clearing Discount 5%
Financing 36 months (3 years)

Settlement:

Item Calculation Amount
Gross Value $100 × 1,000 $100,000
Spread $100 × 5% × 3 × 1,000 $15,000
You Receive $100,000 - $15,000 $85,000

The $15,000 spread is held and accrues to platform fees over 36 months.

Burn Settlement

When an investor burns tokens, the system allocates the burn to supplier fills.

What Happens

  1. Burn Allocated - System selects your fill(s) per the allocation algorithm
  2. Obligation Reduced - Your reserve balance increases (toward zero)
  3. Financing Settled - Earned financing stays; unearned is refunded
  4. Payment Made - You pay the burn settlement to the Energy Substantiation platform

Financing Refund

When tokens burn before your financing period ends, unearned financing is refunded to you:

Days Elapsed = Burn Date - Fill Date
Total Days = Financing End Date - Fill Date
Earned Ratio = Days Elapsed / Total Days

Earned = Total Financing × Earned Ratio
Unearned = Total Financing - Earned
Refund = Unearned × (Burn Quantity / Remaining Quantity)

Example: Burn Settlement

Original fill:

Field Value
Quantity 1,000 tokens
Discount 5%
Financing Period 36 months
Total Financing $15,000
Fill Date January 1, 2024
Financing End Date January 1, 2027

Burn event (12 months later):

Field Value
Burn Date January 1, 2025
Burn Quantity 500 tokens (50%)
Reference Price at Burn $95

Financing calculation:

Item Calculation Amount
Days Elapsed 365 days (1 year)
Total Days 1,095 days (3 years)
Earned Ratio 1 / 3 33.3%
Refund Ratio 2 / 3 66.6%
Earned Financing $15,000 × 33.3% $5,000
Unearned Financing $15,000 × 66.6% $10,000
Refund $10,000 × 50% (burn qty) $5,000

After burn:

Item Before After
Quantity Remaining 1,000 500
Financing Consumed $0 $5,000
Financing Refunded $0 $5,000
Financing Remaining $15,000 $5,000

Buy-Back Settlement

When you voluntarily buy back obligations:

Key Difference from Burns

  • Burns refund unearned financing to you
  • Buy-backs forfeit unearned financing to platform fees

Why the Difference?

You initiated the buy-back, so there's no refund. The unearned financing goes to the platform as a fee for early termination.

Example: Buy-Back Settlement

Same fill as above, but you initiate a buy-back instead of a burn:

Item Calculation Amount
Unearned Financing $10,000
Buy-Back Quantity 50%
Forfeited $10,000 × 50% $5,000

The $5,000 goes to platform fees, not back to you.

Settlement Records

Each settlement creates records you can review:

Fill Record Updates

Field Description
Supply Quantity Remaining Tokens still outstanding
Supply Financing Consumed USD Financing earned (accrued)
Supply Financing Refunded USD Financing returned on burns
Supply Financing Forfeited USD Financing lost on buy-backs

Transaction Records

Each settlement creates transaction entries showing:

  • Amount paid/received
  • Fee breakdown
  • Balance changes

Settlement Summary

Event Your Obligation Financing
Offer matches Increases Held in financing account
Token burned Decreases Unearned refunded
You buy back Decreases Unearned forfeited

Next Steps