From CNBC · Oliver Renick · · 2m
Ex-Citadel quant builds GPU futures hedge for AI risk
As AI stocks tumble, Jasper Zhang's Hyperbolic offers traders a way to hedge by buying and selling actual GPU clusters rather than cash-settled contracts.
In brief
As AI stocks tumble, Jasper Zhang's Hyperbolic offers traders a way to hedge by buying and selling actual GPU clusters rather than cash-settled contracts. Hyperbolic, led by ex-Citadel quant Jasper Zhang, is building a marketplace for physically-settled GPU futures to let investors hedge against AI demand collapse by…
CoreWeave collapse sparks hedging search
As CoreWeave shares plummet and take much of the AI complex with it, investors face a simple question: what is the best way to hedge AI risk?
Meet Jasper Zhang, ex-Citadel quant
Jasper Zhang is an ex-Citadel Securities quantitative researcher who now leads Hyperbolic, a fifty-person financial technology startup building a spot marketplace for tradable GPU computing power.
How Hyperbolic's Forge software works
The platform allows investors to buy and sell GPU clusters through Hyperbolic's Forge software, which virtually logs into clusters worldwide and makes technical tweaks so mismatched clusters work better together.
The problem with GPU standardization
GPU architecture varies wildly depending on how they are assembled, leading to various levels of output. Networking, memory, and security all affect GPU performance, creating basis risk for market-makers.
Hyperbolic's funding and scale
Hyperbolic has raised twenty million dollars since its launch in twenty twenty-two, is in the midst of another funding round, and expects a one hundred fifty million dollar annualized run rate by year-end.
CME and DRW pursue cash-settled futures
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 the biggest prop-trading firms in Chicago.
“Cash futures are a great first building block.”
Why physical settlement matters more
If AI demand hits a wall, AI rent-a-centers like CoreWeave could end up sitting on billions of dollars in hardware with little to no way to cash out. Physical settlement lets companies monetize idle capacity.
“Physical usage is what will tether that connection between the reality and the derivatives.”
Zhang's case for physical hardware access
Zhang argues that what the AI complex needs most is 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.
“Cash-settled futures can help falling prices, but they do not by themselves put idle GPUs to work.”
The key point
Hyperbolic, led by ex-Citadel quant Jasper Zhang, is building a marketplace for physically-settled GPU futures to let investors hedge against AI demand collapse by trading hardware itself.
