Strategy sold $100M to defend STRC’s $100 stock price as DeFi packages the risk into a 7% ‘safer’ trade
Solstice launched a tranched product tied to Strategy’s Bitcoin-backed STRC preferred stock, with senior losses not starting until STRC falls below a modeled $47.66 threshold, far below its near-$95 trading price. The structure splits exposure into senior and junior tokens, with junior absorbing losses first in exchange for higher yield, while senior targets about 7% APY. Solstice says the design aims to give investors a NAV-based return on STRC while reducing price-volatility exposure. The model depends on Strategy’s ongoing effort to support STRC near $99–$100 through a reserve, dividend changes, and buybacks. Strategy has recently repurchased STRC and sold Bitcoin to fund more repurchases. Solstice’s framework includes restricted mode and liquidation steps to protect senior holders if STRC drops further. In backtests using STRC’s prior decline into the low-$70s, senior remained protected unless redemption pressure forced asset sales. The main risk is that a sharp selloff plus mass redemptions could trigger junior losses and test the structure’s assumptions.
