Conceptual Framework for Building Decentralized Electricity Markets Based on Derivative Instruments Using Blockchain Technology.
Postgraduate Researcher in National Technical University of Ukraine “Igor Sikorsky Kyiv Polytechnic Institute”, Quant and Blockchain Developer
propose time later
Max SemenchukThe presentation will cover a model for rebuilding Ukraine’s energy infrastructure through decentralized, blockchain-based electricity markets. It introduces tokenized electricity contracts (PT/YT) and derivative instruments that increase liquidity, transparency, and investment in distributed renewable energy generation — contributing to Ukraine’s sustainable recovery.
Key Ideas:
- Problem with centralized markets: Single point of failure, limited flexibility, no trading instruments, opaque settlement, fixed roles
- Electricity uniqueness: Consumable in time (not storable commodity), cannot be treated like currency/goods
- Token design inspired by Pendle: Split yield-bearing assets into Principal Token (PT) + Yield Token (YT)
- Principal Token (PT): Right to receive electricity power in specific time slot - fungible, splittable, transferable
- Example: 10 PT for 4-5pm = entitled to 10 kWh during that hour
- Yield Token (YT): Right to receive payment for electricity supplied - fungible, allocates escrow liquidity
- Has discount (alpha) pricing model - early redemption gets less, holding until slot end gets full payment
- Incentivizes holding until delivery completion
- Custom order book: ERC-1155 (semi-fungible) with token ID encoding timestamp + price
- Bid orders (producers), Ask orders (consumers), Matcher contract burns orders and mints PT/YT
- Index Yield Token: Solution for YT's short lifespan/low liquidity - basket of multiple YT tokens
- Mint formula ensures liquidity grows faster than supply → increasing token value
- Future work: Agent-based simulation, smart meter integration, EAC (Energy Attribute Certificates) on-chain verification, ZK proofs for consumption privacy, alternative AMM models beyond order books
As Ukraine's energy landscape evolves with an influx of small and medium-sized market participants—complete with renewable energy sources and storage facilities—the traditional centralized trading models are showing their limitations. Vakhtanh's research tackles a fascinating challenge: how can we create dynamic, flexible electricity markets using blockchain-based smart contracts and derivative instruments?
This isn't just theoretical—it's addressing real problems that Ukraine's energy sector faces today: price volatility, the need for sophisticated financial instruments, and the complexity of coordinating thousands of distributed energy producers and consumers. Vakhtanh's conceptual model for a blockchain-powered trading platform could become the foundation for a startup that fundamentally changes how electricity is bought and sold.
In the context of Ukraine's energy independence and the global transition to distributed renewable energy, this work represents the kind of practical innovation that blockchain was made for—transparent, automated, trustless coordination at scale.
Join us to discover how smart contracts could power not just DeFi, but the literal power grid of the future.
Postgraduate Researcher in National Technical University of Ukraine “Igor Sikorsky Kyiv Polytechnic Institute”, Quant and Blockchain Developer