Two digital dollar offerings worth ~$500M tied to Michael Saylor's Strategy face instability amid Bitcoin weakness.
DeFi & Yields ·
Bitcoin's recent weakness has destabilized a major corporate holder whose preferred stock underpins two decentralized-finance stablecoin products worth roughly $500 million combined. Strategy, which holds approximately $58.5 billion in bitcoin, saw its common shares fall from an all-time high near $473.8 to as low as $82 after bitcoin dipped below $60,000 in June 2024 for the first time since October 2024. The company's preferred equity offering, Stretch, dropped to $74—$26 below par—and now carries a 12% annual dividend at junk-bond rates. Annual obligations from preferred dividends and $6.7 billion in convertible debt total roughly $1.76 billion, pressuring the company to authorize up to $1.25 billion in bitcoin sales and abandon its long-held "never sell" stance.
Two DeFi protocols, Apyx and Saturn, had grown reliant on Stretch's yield, holding a combined $490 million across their products. As of mid-July, approximately $267 million remained directly exposed to Stretch. Apyx issues a synthetic dollar, apxUSD, backed by Stretch holdings and cash but unlike traditional stablecoins offers no $1 guarantee; its value fluctuates with reserve performance. During late June turbulence, apxUSD fell below 80 cents before recovering toward 90 cents by July 21, leaving reserves at roughly 91% coverage against circulating tokens.
The sustainability of these yield products remains uncertain. Redemptions face delays of approximately 20 days, and Stretch comprises 84% of Apyx's reserve base, leaving both protocols vulnerable to further declines in the preferred stock or shifts in strategy's ability to service its obligations.