Strategy (formerly MicroStrategy) already pays 11.5% annualized dividends on its ultra-risky Stretch (STRC) but DeFi users are now adding risks and leverage to crank that up to 39%.
In finance, interest rates are often dictated by the risk of total loss. With very few exceptions, when someone offers a higher interest rate, it’s because they’re much more likely to not pay you back.
Unbothered, traders are now re-routing Strategy’s dividend payouts through multiple blockchain protocols to manufacture yields of double, triple, or more what STRC actually pays.
They add future obligations in exchange for near-term payouts, take advantage of temporary incentives for obscure DeFi protocols, and add exotic forms of leverage to amplify the notional exposure of an otherwise small investment.
In the curious underworld of tokenized STRC, there are at least five protocols offering the financial machinery for DeFi yield farmers, not to mention the risks of the custodians and technology providers involved with these protocols.
A daisy-chain of DeFi risks to amplify STRC
Apyx wraps roughly $136 million of STRC into a synthetic stablecoin-like token called apxUSD. Saturn packages approximately $85 million worth of STRC into its USDat product. Another tokenization protocol xStocks put approximately $53 million worth of STRC on-chain.
Meanwhile, Pendle Finance splits these STRC tokens and the dividends paid to STRC stockholders into separately tradable, fixed-rate and floating-rate components, and Morpho provides the loan-looping mechanism at the end to add even more financial leverage on these instruments.
Depositing assets to borrow these tokens, which trade under a variety of ticker symbols like STRCx, apyUSD, apxUSD, USADT, sUSADT, strcUSX, traders borrow tokens, re-deposit some portion of those loan proceeds to take out more loans, re-deposit some portion of those loan proceeds to take out more loans, and so on.
The more loops and the smaller the range of prices that a user collateralizes, the higher the probability that the protocol will forcibly liquidate the position.
Irresponsible dividends, amplified
The base yield of STRC with no tokenization whatsoever is already extreme. STRC pays 11.50% annualized, roughly 450 basis points above the average junk bond.
Indeed, Strategy has hiked its dividend rate seven times since launching STRC at 9% in July 2025.
Each hike tacitly admitted that demand at the prior rate was too weak to hold up STRC’s secondary trading on Nasdaq at its intended $100 per share.
STRC controversy goes mainstream
Rather than ease up on leverage in light of the thinning air, DeFi’s response has been to treat 11.5% as a stable case on which to construct even higher artifices.
Apyx Finance closed a $300 million valuation round in February as a self-described dividend-backed stablecoin protocol.
It issues apxUSD backed by STRC and a related preferred like Strive’s STRC-like SATA, with apyUSD as the yield-bearing version of the same claim. Saturn Credit raised $800,000 from Sora Ventures and Changpeng Zhao’s YZi Labs in January to run the same play through USDat and sUSDat.
Both of these STRC tokenizers wrap their resulting tokens into Pendle, where PT-apyUSD locks in fixed yields of roughly 14.84%.
Users then deposit those PT tokens on Defi protocol Morpho as collateral to borrow USDC at rates as low as 1.59%.
The arithmetic isn’t subtle. A 5x leverage loop landed on a 64% APY. A separate analyst account documented 39% APY.
Hoping and praying STRC never de-pegs for long
On April 14, STRC was approaching its monthly dividend snapshot date, going “ex-dividend” in the parlance of Wall Street, causing its price to decline. That sag dragged sUSDat’s exchange rate below the high-water mark Pendle uses to govern yield accrual for the Saturn token.
Pendle had to explain this basis phenomenon to its users. “Yield accrual on YT-sUSDat is currently paused due to STRC’s ex-dividend event on 14 April, which pushed the exchange rate below the watermark,” it said.
It reassured holders that “If STRC recovers to $100, the watermark is recaptured, yield accrual resumes, and your total earnings will be ultimately unaffected.”
As always, the conditional “if” is doing a lot of heavy lifting.
Indeed, if STRC trades near $100 and pays dividends near 11.5% forever, everything will work out wonderfully.
In fact, STRC fell to $90.52 on November 21, 2025, and to $93.10 in February 2026. That’s why the dividend rate is where it is. It shouldn’t be a mystery as to why Strategy needs to pay such as higher dividend rate.
Unfortunately for STRC traders in DeFi, neither is guaranteed. The quasi-peg has already failed twice in the last six months. Moreover, Strategy’s board of directors can cut the dividend at its discretion.
DeFi traders are also exposed to countless numbers of protocol, blockchain, smart contract, and custodian risks that multiply these risks even higher.
