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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 - The 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 Obligation accrues over the duration

Example: Offer Settlement

Field Value
Reference Price $100
Quantity 1,000 tokens
Clearing Discount 5%
Duration 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. Spread Settled - Earned spread stays; unearned spread is refunded
  4. Payment Made - You pay the burn settlement to the Energy Substantiation platform

Spread Refund

When tokens burn before your duration ends, the unearned portion of the notional spread is refunded to you:

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

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

Example: Burn Settlement

Original fill:

Field Value
Quantity 1,000 tokens
Discount 5%
Duration 36 months
Total Spread $15,000
Fill Date January 1, 2024
Duration 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

Spread 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 Spread $15,000 × 33.3% $5,000
Unearned Spread $15,000 × 66.6% $10,000
Refund $10,000 × 50% (burn qty) $5,000

After burn:

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

Buy-Back Settlement

When you voluntarily buy back obligations:

Key Difference from Burns

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

Why the Difference?

You initiated the buy-back, so there's no refund. The unearned spread 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 Spread $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 Spread Consumed USD Spread earned (accrued)
Supply Spread Refunded USD Spread returned on burns
Supply Spread Forfeited USD Spread lost on buy-backs

Transaction Records

Each settlement creates transaction entries showing:

  • Amount paid/received
  • Fee breakdown
  • Balance changes

Settlement Summary

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

Next Steps