Introduction
Buying and selling EACs before they’re produced.
Overview of The Legacy Market
Most RECs trade in either the spot market (where recently created RECs look to find a buyer before they expire) or the “Power Purchase Agreement” (PPA) market, where very large energy consumers (Google, Amazon, Alcoa, etc) buy the future electricity production of enormous 100MW renewable generators. The Spot market is accessible with small numbers of RECs being traded from many many producers and consumers, but like a local farmers market it’s difficult for anyone to make long-term plans. The product currently in the market is all that buyers can choose from and sellers need to sell all of what they brought to market before it expires. PPA markets on the other hand enable participants to make long-term agreements to fit their long-term needs but the large numbers involved make the market inaccessible to smaller generators/consumers and even the largest consumers can only coarsely match their needs.
An Accessible & Farsighted Market
A forwards market combines the accessibility of a spot market with the farsightedness of the PPA market. It allows consumers of any size buy to EACs that match their long-term goals. It gives generators of any size access to the same pricing and buyers.
Forwards are Liked to Basis Pools
Jasmine’s basis pools allow specific non-fungible EACs to be pooled to create fungible basis commodities. Trades in forwards tokens must be eventually settled using a specific basis commodity. Said another way, the basis pools are the “basis” in which the forwards are denominated. Each forwards token is linked to exactly one basis pool token.
Collateral, Debt, & Delivery
Each forward is essentially a promise from a generator to deliver an EAC once it is generated. Any user representing a generator or holding a PPA can post a PPA with Jasmine as collateral and be cleared by Jasmine to mint forwards for some of their future generation. They can then sell those forwards or distribute them to other wallets as a concrete promise to deliver.
Interset Rate
All debt positions in the forwards protocol are charged a variable APY set by Jasmine Energy.
Lifecycle of a Forwards Token
fJLT tokens aren’t supposed to last forever. They exist to facilitate exchange before spot JLTs are available. They all go through the same lifecycle from being created to eventually being replaced by their basis spot token. Once the basis pool is available and liquid, there’s no longer a need for that forwards token and it’s retired.
Forward Token Listing
Jasmine decides which forwards tokens to list and when based on demand from seller and buyer surveys. Once it’s listed, approved minters are able to start minting/burning the token and redemption queue opens.
Linked Basis Listing
Every fJLT is linked to a single specific Basis Pool [link to basis pool docs]. For example, the Forward Voluntary Front-Half 2024 tokens are linked to the Voluntary Front-Half 2024 pool. Once registries begin issuing EACs that are eligible for the linked basis pool, Jasmine will activate the pool and approved minters can begin closing their position using JLTs from the linked pool.
After the linked basis pool has been listed, but before the final delivery date, both the fJLT and its linked JLT are circulating on Jasmine.
Final Forward Delivery
This is the moment when the spot market fully replaces the forwards market.
To avoid collateral liquidation, all open forward debt positions must be closed by this date. After this date, fJLT holder can be confident that the underlying JLTs will be available for redemption.
Forward Expiration
fJLTs should be exchanged for JLTs in a timely manner after final delivery. Forwards can no longer be exchanged for JLTs after their expiration data; Typically a few months after the the final delivery date.
Spot Expiration
Eventually, the spot EATs are no longer usable for making voluntary or compliance claims. At that point the pool is shut down, and any remaining tokens are no longer redeemable for RECs.
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