Emmy-winning market design firm, co-founded by Nobel laureate Paul Milgrom, is teaming up with leader in Smart Market technology OneChronos to turn compute – the world’s largest unhedged asset – into a tradable financial asset.
Auctionomics, the world’s leading market design firm, and OCX Group Inc, parent company of OneChronos, the technology company leveraging advances in auction theory and computer science to optimize financial markets, today announced a partnership to develop the first financial market for GPU and compute capacity. This collaboration aims to create the financial infrastructure needed to help organizations including investors in data centers, data center operators, power generators, chip manufacturers, and enterprise buyers navigate unprecedented demand for AI compute over the next decade.
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Auctionomics was co-founded by Paul Milgrom, a co-recipient of the 2020 Nobel Prize in Economics for auction theory, and Dr. Silvia Console Battilana, who serves as CEO and led the team’s Emmy-winning design of the FCC auction that enabled television streaming. Together they use game theory and mathematical models to create the right incentives to make the most complicated auctions go smoothly. Auctionomics’ market designs have generated billions in economic value while addressing critical challenges in telecommunications, natural resources, and digital markets. The incentive auction forever transformed media consumption by enabling television streaming and high-bandwidth mobile applications, and is poised to have a similarly transformative impact on the global compute market.
Combined with a new application of OneChronos’ Smart Market technology, the new off-exchange marketplace will be designed to deliver real-time price discovery and liquidity through bi-lateral forwards which will provide users with the ability to lock in future capacity and pricing in advance. This auction-based approach is a step toward more efficiently allocating data center and energy resources, including GPU capacity, and addresses a fundamental challenge facing any organization providing access to compute or building and deploying AI applications: the inability to reliably hedge against price, availability, and efficiency of compute resources and upstream supply chains in a market that is rapidly growing and changing.
Existing on-demand and reserved compute models leave organizations further exposed to price fluctuations and capacity bottlenecks during peak demand periods, as well as uncertainty regarding standards and performance. This new market structure will enable companies to secure compute capacity at predetermined prices for future delivery dates, providing the price certainty, capacity guarantees, and planning visibility that enterprise customers require for AI initiatives and large-scale computing projects.
The financial market aims to bring a new layer of predictability to the energy side of compute, helping data center operators and power providers hedge against volatile power prices and long-term consumption risks. The parties anticipate the market will serve AI research labs, universities, firms investing in data center infrastructure, power generators entering into long term power purchase agreements, data center operators seeking to hedge against market volatility, and organizations building with AI.
Powering this market will be OneChronos’ Smart Market technology: combinatorial auctions that use mathematical optimization to match counterparties based on complex, multi-asset preferences. This technology allows participants to express nuanced trading goals across portfolios and unlock efficiencies that traditional one-to-one markets can’t achieve. Applied to compute, the technology can optimize across the interdependencies between different types of resources, capturing synergies that conventional auctions may miss. Eventually, participants will be able to bid on bundles of compute capacity, power capacity, energy storage, and other compute-upstream resources, enabling efficient allocation across diverse and dynamic computing needs.
"The compute market has reached a scale and complexity that requires the same sophisticated market designs that you’d expect for any mature financial asset class,” said Dr. Console Battilana at Auctionomics. "Our expertise in designing, building, and running multi-billion dollar auctions combined with the technological sophistication of OneChronos’ Smart Market platform will allow us to create a market mechanism that brings transparency, efficiency, and risk mitigation to compute resource markets for the first time.”
The parties anticipate that the financial market will operate through a simple user interface that conceals the underlying mathematical complexity, enabling its institutional participants with varied technical backgrounds to engage in sophisticated trading without requiring deep knowledge of auction theory or optimization algorithms. The system will include monitoring tools designed to detect potential market manipulation and ensure fair access for all participants.
"We've shown how Smart Markets can reshape equities trading – surpassing $6.5 billion in daily volume – and now we're pioneering the first financial market for compute resources alongside Auctionomics," said Kelly Littlepage, CEO and co-founder of OneChronos. "We started building OneChronos in 2016 when, for the first time, it was possible to run combinatorial auctions at the speed and scale necessary for capital markets. This was of course thanks to machine learning. It doesn't stop with capital markets. The technology we've developed can be used to electronify far more of the financial and real economy. The market for computing resources, already larger than the markets for some major commodities such as copper, is ill-suited for conventional auctions. We will bring better price discovery and risk mitigation to this critical resource, in partnership with Nobel laureate Paul Milgrom and his team at Auctionomics."
The partnership builds on Auctionomics' expertise in designing complex auctions that balance efficiency, fairness, and revenue generation across multiple stakeholders. Their work includes creating the mathematical models that enabled the FCC Broadcast Incentive Auction, which reallocated radio spectrum to enable 5G and television streaming.
About OneChronos
OneChronos is a technology company of diverse thinkers innovating at the intersection of capital markets, mechanism design, and operations research, working to grow the global GDP by designing and operating matching markets leveraging advances in auction theory and artificial intelligence.
OneChronos currently operates, through its subsidiary, OneChronos Markets LLC, a broker-dealer that operates an alternative trading system trading U.S. equities, regulated by the SEC and FINRA. Member FINRA/SIPC.
For more information, visit https://www.onechronos.com/.
About Auctionomics
Auctionomics is a Nobel and Emmy-winning market design firm that creates sophisticated auction and marketplace systems for complex resource allocation problems. Founded by Nobel Prize-winning economist Paul Milgrom and game theory expert Dr. Silvia Console Battilana, the company combines sophisticated mathematical models with software to create auction systems that balance efficiency, fairness, and revenue generation. Auctionomics specializes in designing "under-the-hood" complexity that appears simple to users, enabling frictionless transactions in high-stakes environments. For more information, visit https://www.auctionomics.com/
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