Energy Substantiation to Debut WTIC Oil Token on LMAX Exchange

Energy Substantiation plans to debut its WTIC token on the LMAX exchange and add $1 million in liquidity. The token represents one barrel of West Texas Intermediate crude and is backed by physical oil rather than futures or derivatives. Fortune reported that the on-chain value of WTIC currently stands at about $80,000.

Suppliers feed oil into the system through a reverse Dutch auction by offering barrels at a discount to the day’s market price. Holders can redeem WTIC at the daily spot closing price. The structure allows the underlying oil to be treated as a spot commodity rather than a derivative, Energy Substantiation stated, resulting in lighter regulation.

The startup is working with about a dozen commodities firms and oil suppliers, including one major trading house. JP Thieriot, co-founder of Energy Substantiation, first pursued the oil token idea more than a decade ago. He later teamed up with financier and mathematician Donald Putnam, who developed a framework for converting different crude grades into a common energy unit measured in British thermal units.

Javier Molina, crypto analyst at eToro, stated that launching a token is easy but building a liquid market is the challenge. Success will depend on attracting energy participants and not just crypto players, he said. Eric Melvin, CEO of Mobius Risk Group and member of Energy Substantiation’s advisory board, stated that the token offers the best beta available in the market.

Texas Railroad Commissioner Wayne Christian serves on the advisory board and personally emailed prospective investors ahead of the launch. Energy Substantiation’s spokesperson stated that Christian was invited because of his extensive knowledge of the energy sector and does not direct day-to-day operations.