Markets run continuously. Much of the infrastructure that supports them still does not.
Energy risk does not operate under artificial constraints like banking cutoffs, title- transfer processes, or futures expiration dates. A cargo changes course, a supply route is disrupted, or power demand rises — and the exposure changes immediately. Traditionally the assets across the energy industry that could support financing and hedging to manage this risk cannot often react in time to these changes.
In order for an asset to be collateralized and hedged it has to move through a fragmented system of market participants across custody, insurance, valuation, banking, clearing, execution, and settlement systems that each reconcile on different timelines. The time constraints of this process often means that these assets, despite representing real value, sit idle and locked on institutional balance sheets — unable to be efficiently collateralized.
For assets that can be collateralized, capital inefficiencies are further compounded by legacy trading infrastructure — unfit for managing real time risk. Today’s markets are constrained by fixed trading hours, expiring contracts, and the operational costs of rolling positions from one contract to another. High margin requirements, imposed through traditional futures commission merchant and clearing structures, then often exclude small to medium sized market participants from hedging altogether, leaving them exposed to price risk.
It is this market fragmentation and outdated trading infrastructure that Monolith is built to solve.
The end-to-end venue for institutional commodity derivatives
Together with our tri-party clearing partner, Monolith is developing the first end-to-end onchain US venue for institutional commodity derivatives. In a matter of hours, we aim to enable any eligible physical or digital asset to be collateralized, margined, and hedged on 24/7 cash settled commodity contracts.
To achieve this, we are bringing together two important market-structure innovations — tokenization and perpetual futures — within the existing U.S. regulatory framework. The proposed market will be subject to designation by the CFTC as a designated contract market (DCM), registration of its clearing organization as a derivatives clearing organization, and any regulatory requirements applicable to the listed products, clearing arrangements and tokenized infrastructure. Its design is intended to incorporate the institutional safeguards and risk-management principles developed through decades of activity in regulated derivatives markets.
Here tokenization enables physical inventory, securities, and commodities to be represented onchain. This helps solve the issue of fragmented records across legacy systems that can leave valuable assets operationally idle because ownership, custody, financing, and settlement must be verified across multiple parties and systems. Effectively coordinated, tokenization can create a shared, programmable representation of an eligible asset or claim, making those facts easier to reconcile and transfer.
Where legal title, custody, valuation, and enforcement are aligned, that shared record can shorten the path from asset ownership to usable collateral, bringing balance-sheet assets into financing and hedging workflows sooner. Tokenization does not create those rights or remove the underlying risks — it makes sound legal and operational arrangements easier to coordinate.
Perpetual futures then enable margin from this collateral to be traded or hedged. Perpetual futures are effectively derivative contracts without expiration dates, capable of trading continuously rather than within the fixed hours that dated futures observe — enabling 24/7 trading, enhanced liquidity, and efficient price discovery. When properly designed, margined, and cleared, they can reduce roll-related friction and support more continuous deployment of capital and hedging exposure.
The opportunity lies in their combination. Monolith is a purpose-built end-to-end venue enabling tokenization, collateralization, margin, tri-party clearing, hedging, and settlement that can be coordinated in real-time rather than across the separate custody, financing, and clearing relationships that inefficiently connect them today, often with considerable delay.
Energy: the world’s largest commodity market
Our first market is energy. Here, the gap between continuous risk management, fragmented market infrastructure, and outdated trading infrastructure is exposed most clearly — as illustrated most recently by both the Strait of Hormuz crisis and the AI driven demand for compute.
Due to complex banking and title transfer processes, capital in the LNG/crude shipping industry can be trapped for what may be a significant number of days to weeks while ownership, insurance, financing, and settlement complete. During this period, valuable inventory cannot be efficiently monetized or redeployed despite representing valuable collateral. It is locked.
The existing derivatives market then compounds this inefficiency. Traditional oil futures contracts, limited by 23/5 operating hours, result in continuous roll costs, fragmented liquidity, and inefficient price discovery because physical price continues to evolve outside the financial market structure. High-margin requirements of FCMs and legacy clearing structures then often restrict SMEs from economically participating in the market.
Monolith aims to resolve both sides of this capital efficiency at launch, enabling eligible physical inventory, such as oil cargo in transit, to be collateralized and put to work within a matter of hours rather than weeks. Instead of waiting for traditional settlement processes to conclude before capital becomes usable, participants can unlock the value of their assets and deploy that capital across our regulated perpetuals venue in a much shorter time frame.
Here, the market structure is designed specifically to maximize capital efficiency. A single perpetual contract for each benchmark — targeting WTI, Brent, Henry Hub, TTF, and JKM at launch — aims to provide continuous 24/7 exposure. Using a single instrument for each benchmark is intended to reduce liquidity fragmentation, support transparent price discovery, and eliminate the transaction costs and operational complexity associated with periodically rolling expiring contracts.
Through the proposed non-intermediated clearing model, eligible SMEs would be able to participate directly without being required to establish a relationship with an FCM. Subject to the required CFTC designations and approvals, this structure may reduce intermediation costs and broaden access to regulated risk-management tools, while preserving risk-based margin requirements, participant eligibility standards, position and exposure controls, default-management procedures, and other appropriate financial safeguards.
By accelerating the collateralization and margin process from weeks to hours and enabling this to be used across our 24/7 perpetual contracts, we aim to transform idle inventory into productive trading capital. The result is a larger addressable market, materially higher capital efficiency for risk hedging, and access to participants that legacy commodity infrastructure cannot economically serve.
What comes next
That is the work now underway. As Monolith emerges from stealth, we are opening a dialogue with more energy market participants, asset owners, trading firms, market-infrastructure partners, and investors who share this view.
Follow Monolith as we publish more detail on market design, collateral eligibility, and our regulatory path. If your institution is evaluating a tokenization use case, a commodity hedging need, or an investment in market infrastructure, we welcome the conversation.
Please reach out to the Monolith team here.