How It Works
From surplus to exchange in four steps
Describe what you have. Describe what you need. Let the algorithm find the connections.
Overview
The Surplus Exchange Protocol has three core components:
Here's how each works.
Matching
The algorithm searches participant networks for closed loops of exchange: chains where everyone gives something and receives something.
How the algorithm finds chains
Every participant describes two things:
- What they have: surplus capacity, spare time, excess inventory
- What they need: services, goods, help they'd value
These descriptions form a network. Each "has" is a potential connection to someone's "need."
The matching algorithm searches this network for cycles, closed loops where:
- A helps B
- B helps C
- C helps D
- D helps A
When a cycle is found, everyone in the chain can give something and receive something. The loop closes without anyone losing out.
What makes a good chain
The algorithm ranks chains by:
- Match quality: How well do offerings fit needs?
- Trust levels: Have these participants exchanged before?
- Chain length: Shorter chains are easier to coordinate
- Timing alignment: Can deliveries happen in a workable sequence?
Top-ranked chains are proposed to participants for confirmation.
What the algorithm can find that humans can't
A network of 100 businesses might have thousands of potential connections. A network of 1,000 has millions.
No human broker could evaluate all possibilities. The algorithm checks them in seconds.
More importantly, it finds connections across industries and contexts that no one would think to look for. The theatre and the accountant have no obvious relationship. But the algorithm spots that both connect to a designer who connects to a cafe.
Trust
Trust is built gradually through completed exchanges and verifiable track records, not ratings or reputation scores.
The cold-start problem
New participants have no track record. How do you trust them?
The answer: you don't. Not at first. Trust is built gradually.
Trust tiers
- Bilateral exchanges only
- Single concurrent exchange
- Track record begins
- Chain participation
- Multiple concurrent exchanges
- Track record accumulation
- Full exchange participation
- Can vouch for new members
- Visible history to partners
- Network stabilising role
- Large, complex chains
- Extensive verified history
How trust is earned
Every completed exchange generates signals:
- Did both parties deliver?
- Were they satisfied?
- Was timing as promised?
These signals accumulate into a track record. Good track records open access to larger exchanges and more complex chains.
Vouching
The default entry path is the Newcomer tier. You verify your identity and start with small bilateral exchanges. No introduction needed. Everyone can participate.
Vouching is an accelerator. An established member can vouch for you, letting you skip the Newcomer tier and start at Probationary with access to chains:
"I know this business. I'm willing to stake some of my reputation on them."
This is about speed, not access. Vouching lets you move faster, but you don't need it to get started. If the newcomer performs well, both gain. If they don't, the voucher's reputation takes a small hit too.
Exchange
Every exchange follows a clear lifecycle from proposal through satisfaction, with human confirmation at every step.
The lifecycle of an exchange chain
Proposal: The algorithm finds a viable chain and proposes it to all participants. Each participant sees what they would provide, what they would receive, who else is in the chain, and proposed timing.
Confirmation: Every participant must confirm before anything happens. Review the proposal, check track records, confirm or decline. If anyone declines, the chain doesn't proceed.
Execution: Once confirmed, participants deliver what they promised. Delivery happens in whatever order the chain requires, often in parallel.
Satisfaction: After delivery, both sides signal whether they're satisfied (fully, partially, or not at all). These signals feed back into trust calculations.
What happens if something goes wrong
Exchanges can fail. A participant might not deliver, or delivery might not meet expectations.
When this happens:
- Satisfaction signals reflect what happened: delivered, partially delivered, or not delivered
- The first step is a conversation between the participants involved
- Persistent patterns affect trust and future matching opportunities
- Escalation to governance is available but rarely needed
The system tracks commitment fulfilment, not balance. The question is "did they do what they said?" not "did they give enough?" You choose what to commit to, and trust reflects whether you followed through.
Subjective Value
There is no shared currency or exchange rate. Each participant maintains their own sense of balance, valued on their own terms.
No universal currency
There's no "SEP token" or exchange rate. Each participant tracks their own sense of balance.
When you provide something, the recipient records what it was worth to them. When you receive something, you record what it was worth to you.
Your ledger is yours. Their ledger is theirs.
Why this works
Value is genuinely subjective. An hour of legal advice might be worth:
- Very little (if you didn't need it)
- A lot (if it saved your business)
Forcing both sides to agree on a number creates friction. Letting each side record their own experience removes that friction.
The system doesn't need to know the "true" value of anything. It just needs to find chains where everyone ends up better off than they started.
Summary
| Component | What it does |
|---|---|
| Matching | Finds chains of exchange across the network |
| Trust | Builds confidence through track record and vouching |
| Exchange | Coordinates confirmation, delivery, and satisfaction |
| Subjective value | Lets each participant track their own sense of balance |
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