Lots of buzz recently on compute capital markets. But what might these markets actually look like? A few thoughts on its market structure from first principles: > First, almost everyone agrees that compute has a nonfungibility quality. It behaves closer to electricity (temporal, nonfungible) than corn, oil, and gold. > This nonfungibility creates several downstream corollaries: (1) Reservations/capacity forwards are almost always bilateral OTC trades on particular SKUs and params (I want X hours of H200s in us-east-1 running Y model at 12pm on 8/1/2026) (2) There is no transparent "one-size-fits-all" pricing model for "generic H200s" like there is for corn/oil/gold, hence no proper futures market used for hedging (3) Most of the teams building in the space (eg. Silicon Data, Ornn, Compute Desk) are focusing on "standardization" indices/benchmarks, in preparation to create a liquid futures market. > The short-side of compute markets fundamentally comes from neoclouds (Coreweave, Nebius, Lambda) and indepedent data centers (people with GPUs), while the long-side of compute markets comes from inference dev platforms (Fireworks, Modal, Baseten) and the agentic applayer (Cursor, Perplexity, Suno, Rime) that do not run datacenter fleets > But these principals will never directly trade on general compute exchanges (eg. an H200 basket) because they require specific SKUs. Instead, they'll make their reservations/capacity forwards for specific SKUs with OTC dealers. > These dealers in turn can "hedge" particular SKUs with exposure to the underlying generalized basket exchanges. So the folks actually using compute futures exchanges are going to be MMs/OTC desks/compute dealers on both sides. This creates an endgame market structure like below: