Ex-Citadel Quant’s Hyperbolic Pitches GPU Spot Market as AI Hedge

The platform lets investors buy and sell GPU clusters, the units that power AI compute, through Hyperbolic’s Forge software. Forge virtually logs into clusters worldwide and makes technical tweaks so mismatched clusters work better together, allowing traders to buy and sell a standardized unit of compute and control the underlying GPUs for their own purposes. Zhang said the access is as good as being in the data center itself and described the technology as the first building block of “physically” settled GPU futures, which on settlement would give contract owners complete control over a cluster with known characteristics.

The pitch addresses a problem in GPU markets: architecture varies widely depending on how clusters are assembled, producing different levels of output. Every data center is different, and networking, memory and security affect GPU performance. Financing agreements often prevent builders from sharing prices, meaning a survey-based index may average setup costs while missing outlier expenses. In futures markets, that is called basis risk, and Zhang hopes Hyperbolic can fill the void.

Zhang, 31, came to America with several Chinese math medals and finished a math doctorate at U.C. Berkeley in two years before joining Citadel Securities to build trading models. Hyperbolic’s head of finance, Hong Chan Kim, is a hedge fund veteran who has worked at Point72, Balyasny Asset Management and Citadel LLC. Hyperbolic has raised $20 million since launching in 2022, is in the midst of another funding round and expects a $150 million annualized run rate by year-end. The company says it has about 250,000 users and an estimated $200 million worth of annual GPU compute connected to its platform.

Other large players see a similar opportunity. CME Group plans to offer a cash-settled futures product tied to GPU pricing maintained by Silicon Data, an index provider backed by DRW, one of Chicago’s biggest prop-trading firms. “There’s a ton of demand and capital flowing into this ecosystem so there’s a lot of risk,” Don Wilson, founder and CEO of DRW, said in a call. “Cash futures are a great first building block. There are plenty of electricity futures that are cash-settled, oil futures that are cash-settled, so I think you can start these things either way.”

The CME product is under review with the CFTC, which recently extended the review period to Nov. 9, likely also tying up another futures contract proposed by Intercontinental Exchange and data provider Ornn, backed by Andreessen Horowitz’s a16z crypto fund. Hyperbolic’s Kim said cash-settled futures may not reflect reality. “Our guess is when the cash-settled futures come out they’re not going to be reflective of what’s going on in reality,” Kim said. “Physical usage is what will tether that connection between the reality and the derivatives.”

Cash futures are an imperfect hedge for real-world risk. If AI demand hits a wall, AI rent-a-centers like CoreWeave could end up sitting on billions of dollars in AI hardware with little or no way to cash out. “Indices are a normalized global number,” said Carmen Li, CEO of Silicon Data and DRW-backed Compute Exchange, a marketplace for buying and selling GPUs that is also laying groundwork for physically settled futures. “You get financially hedged, but if you’re looking for procurement, that’s not going to help you.”

Zhang contends the AI complex, particularly smaller startups without the capital or credit to risk big hardware purchases, needs a virtual pipeline to physical hardware. “CoreWeave’s debt situation would be less concerning if providers had more ways to monetize available GPU capacity during a slowdown, especially when long-term contracts carry thin margins,” Zhang said. “Cash-settled futures can help falling prices, but they do not by themselves put idle GPUs to work.”