On-Three-Chain (OTS): A Conceptual Framework for Analysing Circular Capital Flows in the Artificial Intelligence Industry

Abstract. The rapid expansion of artificial intelligence (AI) has produced a dense and increasingly opaque web of financial relationships in which investors, chip suppliers, cloud providers, and model developers simultaneously act as financiers, suppliers, and customers of one another. Public commentary has described these arrangements as "circular deals," but no disciplined conceptual instrument exists to describe, decompose, and compare them. This paper formalises On-Three-Chain (OTS) as a conceptual framework for analysing the economic interconnection of three chains in the AI industry: (1) the capital and investment chain, (2) the infrastructure and compute chain, and (3) the AI product and revenue chain. The framework specifies the actors, flow types, and feedback loops connecting the three chains, distinguishes healthy ecosystem interdependence from fragile circular financing, and proposes testable propositions and measurable indicators. The paper situates OTS within literatures on the economics of AI, vendor financing, capital structure, and Minsky's financial instability hypothesis. It shows that OTS does not by itself assert fraud or a bubble; rather, it provides a structured lens that becomes consequential when inter-party financing and spending grow materially faster than independent end-customer demand and realised economic value. The paper closes with a research agenda covering hypotheses, measurement methodology, verifiable case studies, and limitations. Keywords: artificial intelligence; AI economics; circular financing; vendor financing; capital structure; financial instability; compute infrastructure; OTS; conceptual framework.