Placing and Oder Formulas
To create a “new order” or match a “live order”,first you must fill in the filters with the parameters of the trade you want to place. Once your order is ready to be placed, you can choose between simulating your trade or do it for real.
To perform a real transaction, you must have aWallet connected with the DEX and funded with USDC to trade and MATIC to paythe gas fees.
All transactions are settled using Kilowattshour as the unitary quantity:
1 Megawatt = 1,000 Kilowatts = 1,000,000 Watts
Units of electricity measurement: small, medium, and large, respectively.
The formulas for placing a trade with which the settlement is made are described below.
Futures
Is the obligation between two parties to exchange cash flows agreed on the fixed price. No physical delivery of the underlying electricity takes place, there is only USDC settlement when the operator publishes the prices.
| Sell (Offer) price |
(Maximum Loss - Working Capital) + Fees |
| Buy (Bid) price |
Maximum Loss + Fees |
| Sell (Offer) price |
When a trader submits an offer to sell electricity on Watt2Trade, they express their willingness to provide a specific quantity of energy at a specified price, committing to fulfilling this obligation upon market price clearance.
|
| Buy (Bid) price |
When a trader places a bid to purchase electricity on Watt2Trade, they commit to acquiring a specific quantity of energy at an agreed-upon price, binding themselves to fulfill this obligation.
|
Options
Is an agreement between two parties that give the buyer of the option the right to buy or sell at a specified price on a specific future date. When the option is exercise, the seller of the option must deliver the contract at the strike price. The following formula explains the working capital for each part in a “smart option contract”
|
CALL |
PUT |
| Sell |
Maximum Loss + Fees |
Maximum Loss + Fees |
| Buy |
Maximum Loss + Fees |
Maximum Loss + Fees |
Maximum Loss
Is measured with the cap or floor netted with the bid and offer for futures or strike price and prime for an option multiplied by the KWh.
| FUTURE MAXIMUM LOSS |
| Sell |
(Cap Price × Quantity KWh) |
| Buy |
(Floor Price × -1) × Quantity KWh |
| Cap Price |
The maximum price at which a market price may clear. This is defined by the governance of Wattoin for each market and marks the amount of guarantees the seller needs to deposit.
|
| Floor Price |
The minimum price at which a market price may clear. This is defined by the governance of Wattoin for each market and marks the amount of guarantees the buyer needs to deposit.
|
|
CALL |
PUT |
| Sell |
[(Cap Price - Strike Price - Prime) * Quantity KWh] |
[(Strike Price + (Floor Price × -1) - Prime) * Quantity KWh] |
| Buy |
Prime * Quantity KWh |
Prime * Quantity KWh |
| Cap Price |
The maximum price at which a market price may clear, defined by the governance of the Wattoin for each market, marking the amount of guarantees the seller needs to deposit. |
| Floor Price |
The minimum price at which a market price may clear, defined by the governance of the Wattoin for each market, marking the amount of guarantees the buyer needs to deposit. This is normally a negative price based on the physical market floor price. |
| Strike Price |
The "Strike Price" at which players can participate in the market by executing an option contract. |
| Prime |
The fee that the buyer must pay to the seller in order to guarantee the transaction. |
Working Capital
Is the result of multiplying the bid or offer price by the quantity of KWh for a future.
For an option is the strike or the prime (depending on if buying or selling) price times the quantity of KWh. The outcome of the following formulas is considered the Working Capital for each part.
| Sell (Offer) price |
Is the price you will get paid for selling the electricity to the buyer at the specified price. Once the market prices are cleared by the market operator, you will be paid the value of the local marginal price. |
| Buy (Bid) price |
Is the price at which you must pay for the energy to the seller at the specified price. Once the market prices are cleared by the market operator, you will be paid the value of the local marginal price. |
| OPTIONS WORKING CAPITAL |
| Sell |
Strike Price * Quantity KWh |
| Buy |
Prime * Quantity KWh |
| Strike Price |
The "Strike Price" is the price at which the players can participate in the market by executing an option contract. |
| Prime |
Is the fee that the buyer must pay to the seller in order to guarantee the transaction. |
Orders Settlement
After depositing the maximum loss and working capital, once the market price is published by the operator then each of the parties will be settled and will receive the equivalent of what was deposited less or more result according to the following formulas:
| FUTURES SETTLEMENT |
| Sell |
Maximum Loss + [Working Capital – (Market Price * KWh)] |
| Buy |
Maximum Loss + [Working Capital + (Market Price * KWh)] |
| Sell |
After the market prices are cleared, the buyer pays the seller the agreed-upon price for the acquired electricity. The seller receives payment equivalent to the value of the Local Marginal Price (LMP) from the market operator. |
| Buy |
Upon market price clearance, the buyer pays the seller the agreed-upon price for the purchased electricity. The buyer receives payment equivalent to the value of the Local Marginal Price (LMP) from the market operator. |
| Term |
Definition |
| Future |
The obligation between two parties to exchange cash flows agreed on the fixed price. No physical delivery of the underlying electricity takes place, only USDC settlement when the operator publishes the prices. |
| Offer Price |
The price you will get paid for selling electricity to the buyer at the specified price. Once the market prices are cleared by the operator, you will be paid the value of the local marginal price. |
| Bid Price |
If you bid (purchase), you must pay the energy to the seller at the specified price. Once market prices are cleared by the market operator, you will be paid the value of the local marginal price. |
| Option |
An agreement between two parties that gives the buyer the right to buy or sell at a specified price on a specific future date. When exercised, the seller must deliver the contract at the strike price. |
| Call Option |
A call or cap gives the buyer price protection against the market moving above the strike price, in exchange for the premium or fee. |
| Put Option |
A put or floor gives the buyer protection against the market price moving below the strike price, in exchange for the premium or fee. |
| Strike Price |
The price at which players can participate in the market by executing an option contract. |
| Prime |
The fee that the buyer must pay to the seller to guarantee the transaction. |
| Work Capital |
The result of multiplying the bid or offer price by the quantity of KW; for an option, the strike or prime price multiplied by the quantity of KW. |
| Guarantee |
The relationship between maximum losses netted with income and expenses, multiplied by the amount of KWh. |
| Maximum Loss |
Measured with the cap or floor netted with the bid and offer for futures, or strike price and prime for an option, multiplied by the KWh. |
| Cap Price |
The maximum price at which a market price may clear, defined by the governance of Wattoin for each market; it marks the amount of guarantees the seller needs to deposit. |
| Floor Price |
The minimum price at which a market price may clear, defined by the governance of Wattoin for each market; it marks the amount of guarantees the buyer needs to deposit. |
| Market Price |
The clearing prices resulting from the publication of the market operator. |
| On-Peak |
Hours from HE 7 to HE 22. |
| Off-Peak |
Hours from HE 1 to HE 6 and HE 23 to HE 24. |
| 24/7 |
All 24 hours from HE 1 to HE 24. |
|
CALL
If Market Price < Strike Price |
PUT
If Market Price > Strike Price |
| Sell |
Maximum Loss + Buyer’s Working Capital |
Maximum Loss + Buyer’s Working Capital |
| Buy |
N/A |
N/A |
*N/A = Does not apply
| Strike Price |
The "Strike Price" is the price at which players can participate in the market by executing an option contract. |
| Buyer Working Capital |
Is the fee paid by the buyer to the seller to secure the option position. |
The Watt2Trade Smart Contracts ensure fair compensation, liquidity and contributes to the equitable functioning of electricity transactions for both parties.
On Peak, Off Peak And 24/7 Prices
The price at which players will be able to place new orders or match live orders is divided into three different options.
A day is made up of 24 hours, users will have three channels in which they will place their bids and offers and in turn the market price will settle.
Watt2Trade use Hour ending (HE) to settle its transactions, HE typically is denoted by the conclusion of an hour on the clock. In electricity, "hour ending" is commonly used to specify the conclusion of a one-hour period
| 24/7 |
| OFF PEAK |
ON PEAK |
|
| 1 | 2 | 3 | 4 | 5 | 6 |
7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 |
23 | 24 |
Smart Contract Glossary
| Term |
Definition |
| Future |
The obligation between two parties to exchange cash flows agreed on the fixed price. No physical delivery of the underlying electricity takes place, only USDC settlement when the operator publishes the prices. |
| Offer Price |
The price you will get paid for selling electricity to the buyer at the specified price. Once the market prices are cleared by the operator, you will be paid the value of the local marginal price. |
| Bid Price |
If you bid (purchase), you must pay the energy to the seller at the specified price. Once market prices are cleared by the market operator, you will be paid the value of the local marginal price. |
| Option |
An agreement between two parties that gives the buyer the right to buy or sell at a specified price on a specific future date. When exercised, the seller must deliver the contract at the strike price. |
| Call Option |
A call or cap gives the buyer price protection against the market moving above the strike price, in exchange for the premium or fee. |
| Put Option |
A put or floor gives the buyer protection against the market price moving below the strike price, in exchange for the premium or fee. |
| Strike Price |
The price at which players can participate in the market by executing an option contract. |
| Prime |
The fee that the buyer must pay to the seller to guarantee the transaction. |
| Work Capital |
The result of multiplying the bid or offer price by the quantity of KW; for an option, the strike or prime price multiplied by the quantity of KW. |
| Guarantee |
The relationship between maximum losses netted with income and expenses, multiplied by the amount of KWh. |
| Maximum Loss |
Measured with the cap or floor netted with the bid and offer for futures, or strike price and prime for an option, multiplied by the KWh. |
| Cap Price |
The maximum price at which a market price may clear, defined by the governance of Wattoin for each market; it marks the amount of guarantees the seller needs to deposit. |
| Floor Price |
The minimum price at which a market price may clear, defined by the governance of Wattoin for each market; it marks the amount of guarantees the buyer needs to deposit. |
| Market Price |
The clearing prices resulting from the publication of the market operator. |
| On-Peak |
Hours from HE 7 to HE 22. |
| Off-Peak |
Hours from HE 1 to HE 6 and HE 23 to HE 24. |
| 24/7 |
All 24 hours from HE 1 to HE 24. |
