Arthur Hayes proposes futures contracts for AI compute.
On October 27 he published an essay outlining futures and perpetual swaps tied to Flop Network’s proposed compute market, where AI agents would pay for computing power using FLOP.
The Flop Reference Compute Rate (FRCR) would be calculated hourly using a volume‑weighted FLOP price per GigaFLOP of computing capacity.
Quarterly futures would settle on the last Friday of March, June, September and December, with contracts using US dollars for margin and profits, creating a quanto derivative because the underlying is priced in FLOP.
The perpetual swap would use an eight‑hour time‑weighted average of the difference between its trading price and the FRCR to calculate funding payments, mirroring crypto perpetuals where traders on the expensive side pay those on the cheaper side.
Market makers could recreate futures exposure by buying or supplying Flop Compute Units (FCUs), and suppliers would post FLOP bonds that they could lose if they fail to deliver the promised computing work.
The design relies on Flop Network first establishing a functional spot market; network blocks would record inference tasks, completed work, and fees paid to miners, providing the exchange rate between FLOP and computing capacity.
Do you think a dollar‑denominated compute futures market can attract enough liquidity, or will the need for a reliable spot market be the limiting factor?
#AI #Derivatives #FinTech #Crypto
On October 27 he published an essay outlining futures and perpetual swaps tied to Flop Network’s proposed compute market, where AI agents would pay for computing power using FLOP.
The Flop Reference Compute Rate (FRCR) would be calculated hourly using a volume‑weighted FLOP price per GigaFLOP of computing capacity.
Quarterly futures would settle on the last Friday of March, June, September and December, with contracts using US dollars for margin and profits, creating a quanto derivative because the underlying is priced in FLOP.
The perpetual swap would use an eight‑hour time‑weighted average of the difference between its trading price and the FRCR to calculate funding payments, mirroring crypto perpetuals where traders on the expensive side pay those on the cheaper side.
Market makers could recreate futures exposure by buying or supplying Flop Compute Units (FCUs), and suppliers would post FLOP bonds that they could lose if they fail to deliver the promised computing work.
The design relies on Flop Network first establishing a functional spot market; network blocks would record inference tasks, completed work, and fees paid to miners, providing the exchange rate between FLOP and computing capacity.
Do you think a dollar‑denominated compute futures market can attract enough liquidity, or will the need for a reliable spot market be the limiting factor?
#AI #Derivatives #FinTech #Crypto
