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 is matched with mint orders, receipts are created and you receive payment
2. Burn Settlement - When tokens are burned against outstanding receipts

Offer Settlement¶

When your offer is matched with mint orders at the daily auction:

What Happens¶

1. Receipts Created - The system generates volumetric energy receipts for the matched quantity and applicable locations
2. Receipts Sent to Custodian - The receipts are deposited with an independent custodian
3. Payment Credited - You receive payment to your internal balance
4. Spread Held - The spread is held in a separate account
5. Obligation Recorded - Your reserve balance reflects the receipts now outstanding

Payment Calculation¶

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

Timeline¶

Example: Offer Settlement¶

Settlement:

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

The system generates volumetric energy receipts representing the 1,000-token quantity and sends them to the custodian.

Burn Settlement¶

When an investor burns tokens, STRATA selects the receipts used for redemption.

What Happens¶

1. Receipts Selected - STRATA selects the receipts used for the redemption
2. Receipts Reduced or Retired - The selected receipts are reduced or retired based on the burn quantity
3. Obligation Reduced - Your reserve balance increases (toward zero)
4. Spread Settled - Accrued spread stays; applicable unaccrued spread is refunded
5. Payment Made - You pay the burn settlement to the Energy Substantiation platform

Spread Refund¶

When tokens burn before the receipt duration ends, the platform uses the original issue discount (OID) method to determine the accrued and unaccrued spread as of the settlement date. Accrued spread remains with the platform, while the applicable unaccrued amount for the redeemed receipt quantity is refunded to you.

Buy-Back Settlement¶

When you voluntarily buy back obligations:

Key Difference from Burns¶

• Burns refund applicable unaccrued spread to you
• Buy-backs forfeit applicable unaccrued spread to platform fees

Why the Difference?¶

You initiated the buy-back, so there's no refund. The platform uses the OID method to determine the accrued and unaccrued spread as of the settlement date, and the applicable unaccrued amount is forfeited as an early termination fee.

Settlement Records¶

Each settlement creates records you can review:

Receipt Updates¶

Receipts contain commodity volume, location, and bailment-period information. They do not contain price or spread information.

Receipt Reissuance¶

A receipt may need to be reissued when information on it changes. This may happen after a change to a supplier's legal name or location information, or, less commonly, when EnSub information changes or a new field must be added to the receipt.

To reissue a receipt, the system fully redeems the affected existing receipt and generates a replacement containing the updated information and the remaining capacity. Reissuance does not erase the receipt's history: the chain from the original receipt through each replacement is maintained.

Associated Accounting Updates¶

The accounting records associated with a receipt track:

Transaction Records¶

Each settlement creates transaction entries showing:

• Amount paid/received
• Fee breakdown
• Balance changes

Settlement Summary¶

Next Steps¶

• Spread - How spread accrues over time
• Buy-Backs - Retiring obligations early
• The Auction - How offers are matched with mint orders