Risks & Open Questions

Liquidity

In their first year, compute futures markets will be thin. Thin markets:

• Have wide bid-ask spreads.
• Can't absorb large hedging positions without moving the price.
• Can be manipulated by relatively small participants.
• Don't generate reliable price signals.

Building liquidity takes years for any new commodity futures market. Compute will be no different.

Index manipulation

The reference index is the foundation. If the index can be manipulated, the futures contracts lose integrity. Specific risks:

• Wash trades that inflate observed prices.
• Strategic transactions designed to move the index at expiry.
• Insufficient transaction data sources allowing concentrated influence.
• Methodology gaps that can be exploited.

Both Silicon Data and Ornn have published methodologies addressing these risks. Whether they hold up in practice will be tested.

GPU obsolescence

An H100 contract for delivery in 2028 references a GPU that may by then be three generations behind. The economic value of "H100 in 2028" depends critically on what alternatives exist then.

Contract specifications need to handle this. Options include:

• Limiting contract tenors to near-term.
• Cash-settlement against the index regardless of physical relevance.
• Specifying delivery mechanisms that handle obsolescence.
• Rolling contracts to current-generation GPUs over time.

Regulatory

Compute futures fall under CFTC jurisdiction in the US. The regulatory framework adapted to allow the launches; future evolution may bring:

• Stricter position-limit rules as the markets grow.
• Reporting requirements for large positions.
• International coordination as similar markets emerge elsewhere.
• Specific rules around AI-related concerns.

Physical delivery

Physical settlement of compute futures requires:

• Standardized "compute delivery" specifications (which provider, which location, which configuration).
• Approved counterparty list for delivery.
• Mechanisms for handling delivery failures.
• Quality verification.

Physical delivery is messier than financial. Most contracts will settle financially.

Systemic risks

As compute futures grow:

• Concentrated positions could threaten clearing-house stability.
• Correlations with broader AI sector could create systemic exposure.
• Failure of major participants could cascade.

These are normal commodity-futures risks but worth tracking as the market scales.

Takeaway

The risks are real but manageable. The next chapter examines the longer-term implications for the industry.