Strategy reports huge losses in new financial statements, but STRC becomes a new favorite in DeFi. How is the 11.5% high interest being brought onto the chain?

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Author: Jae, PANews

On May 6th, Strategy released its Q1 2026 financial report.

The numbers are not looking good: a net loss of $12.54 billion, mainly due to changes in the fair value of Bitcoin holdings. CEO Michael Saylor casually mentioned during the conference call that “we may sell some Bitcoin to pay dividends.”

Once the news broke, Strategy’s stock price fell over 4% after hours, and Bitcoin also briefly dropped below $81,000.

However, while traditional markets are voting with their feet, Strategy’s products are gaining popularity in another market. Its perpetual preferred stock STRC is becoming a “new favorite” in the DeFi space.

Three major DeFi protocols—Saturn, Apyx, and Pendle—are building a “Bitcoin on-chain yield structure” around STRC, launching a financial experiment to explore Bitcoin’s ultimate capital efficiency.

11.5% High Yield Attraction, STRC Leverages DeFi Integration

In July 2025, Strategy launched the perpetual preferred stock STRC on NASDAQ, with no maturity date and no need to repay principal, only paying dividends monthly, becoming a financing tool for Saylor to buy more coins.

When STRC’s market price falls below its $100 face value, the board will increase the dividend rate to attract buyers; when above, it will lower the dividend rate. As of May 2026, the annualized dividend yield for STRC has risen to 11.5%, far above the approximately 3.7% yield of U.S. Treasuries, making it a favorite among retail investors.

Related: STRC drops below $100, Strategy’s perpetual coin-buying machine slows down

This mechanism has created a financing flywheel for Strategy. The company will only issue new shares at par value when STRC’s price is at least $100, and after deducting dividend reserves, the proceeds will be used to buy Bitcoin.

Saylor calls this model “smart leverage”: for every $1 raised through STRC, Strategy issues $2 of common stock MSTR, maintaining a leverage ratio of about 33%. This means that $1 of STRC can be converted into $3 worth of Bitcoin buying power.

Currently, the issuance scale of STRC has reached $8.5 billion, ranking among the largest preferred stocks globally. Despite Strategy recording a net loss of $12.8 billion in Q1 due to Bitcoin impairments, the STRC Sharpe ratio remains high at 2.53, with relatively ample liquidity.

The performance of STRC also foreshadows its integration into on-chain DeFi protocols.

Saturn First to Enter, Bringing STRC Dividend Yields On-Chain

Saturn is the first protocol to take the plunge. It received $800k in seed funding from Yzi Labs and Sora Ventures, converting STRC’s dividend income into on-chain stablecoin cash flow. Co-founder Kevin Li describes the protocol as “digital credit’s Tether.”

Saturn uses a dual-token model similar to Ethena, separating liquidity and yield:

USDat: the base stablecoin, fully collateralized by tokenized U.S. Treasuries, serving as the protocol’s liquidity layer, mainly for payments, settlements, and DeFi collateral;

sUSDat: staked version of USDat, when users deposit USDat into the staking contract, Saturn switches the underlying reserves from Treasuries to STRC, and sUSDat’s yield directly derives from STRC’s monthly dividends.

Currently, Saturn’s total STRC holdings have grown to about $50 million. Since STRC pays cash dividends, Saturn re-invests on-chain via cash or exchange rate adjustments to let sUSDat appreciate relative to USDat. As of May 7, the yield on sUSDat has reached 9.51%.

To attract early users, Saturn launched the “Gravity Points” program, offering up to 18-20x points rewards for trading USDC/USDat and USDC/sUSDat pairs on Curve, quickly building initial liquidity depth. Within just one month of mainnet launch, Saturn’s TVL surged from $40 million in testing to $122 million, more than tripling.

$130 million in STRC Holdings, Apyx Focuses on Yield Enhancement

If Saturn is building the base currency, Apyx is enhancing credit yields. As the largest external holder of STRC, its holdings are close to $130 million, rolling the basic dividends into excess returns through yield aggregation.

Apyx also adopts a separation model of non-yield stablecoins and yield-bearing tokens:

apxUSD: synthetic USD, backed by excess collateral of SATA preferred stock issued by Strive and STRC. apxUSD does not pay yields directly, mainly used for lending market liquidity.

apyUSD: yield token, users depositing into apxUSD can receive it, and it appreciates by capturing all dividend streams from the underlying asset portfolio.

Unlike Saturn, Apyx’s yields have a “leverage effect.” Not all apxUSD holders choose to stake; all dividends from STRC are distributed to a smaller number of apyUSD holders. As of May 7, the 30-day average annualized yield for apyUSD is 11.1%, with expected yields set above 13%.

Notably, Apyx’s risk management also carries a touch of traditional finance:

Dynamic Rebalancing: the asset basket automatically adjusts based on issuer concentration limits, liquidity needs, and over-collateralization requirements;

30-day Redemption Cooling Period: redemptions of apyUSD have a 30-day cooling-off period to prevent liquidity crises.

Interest and Principal Split, Pendle Adds an Interest Rate Curve to STRC Assets

When Saturn and Apyx bring STRC dividends on-chain, Pendle tokenizes yield assets to inject credit attributes into these assets.

Pendle splits yield assets sUSDat/apyUSD into two independent tokens:

PT (Principal Token): principal token, usually traded at a discount, redeemable 1:1 for the underlying at maturity, locking in a fixed annualized return and hedging interest rate fluctuations.

For example, if a user buys PT-apyUSD with an implied yield of 18.42% over one year, spending 1 apyUSD to buy 1 PT-apyUSD, they will receive 1.18 apyUSD at redemption.

YT (Yield Token): yield token, typically priced well below the underlying asset, allowing users to leverage their exposure to increases in STRC dividends with less capital.

For example, 1 YT-sUSDat costs 4% of 1 sUSDat, meaning spending 1 sUSDat can buy 25 YT-sUSDat, so small increases in sUSDat (STRC) yield will amplify user returns 25 times.

Additionally, users can provide liquidity in Pendle’s sUSDat and apyUSD pools to earn trading fees and PENDLE incentives.

Pendle’s involvement introduces an “implied yield curve” into the Bitcoin credit market, marking a leap toward credit assets for Bitcoin. Currently, the total value locked (TVL) of assets issued by Apyx and Saturn on Pendle reaches $200 million and $55 million, respectively.

DeFi Reinforces STRC Financing Resilience, Nested Leverage Risks of Chain Liquidations

As DeFi protocols integrate STRC, it appears as an upgrade to DeFi gameplay but also influences Strategy’s financing capacity and Bitcoin’s asset attributes.

DeFi protocols, as large buyers of STRC, objectively enhance its price resilience in the secondary market. As long as STRC stays above par, Strategy can continue issuing new shares to buy more Bitcoin.

Strategy discloses that over $270 million of STRC are circulating in DeFi markets, accounting for about 3% of total issuance. This on-chain liquidity feeding off-chain credit model may become a classic case in the RWA (Real-World Asset) field.

Through STRC and its DeFi derivatives, Bitcoin gains an “interest-earning” characteristic. Long considered “digital gold,” its main value lies in scarcity rather than cash flow. Now, investors can earn over 10% annualized yield without selling Bitcoin, simply by holding stablecoins based on STRC dividend streams.

Despite the sophisticated on-chain yield structure of STRC, its multi-layer nesting also amplifies risks and vulnerabilities.

Some DeFi players are using recursive leverage to boost yields: depositing assets into Apyx for apxUSD, wrapping into Pendle for PT, then collateralizing PT on Morphos to borrow USDC to buy more apxUSD. This 5x leverage cycle can push basic yields to 60% or higher.

However, the assumptions supporting this chain are fragile: STRC faces dividend deferral risk. Dividends are not guaranteed; under market stress, Strategy’s board might suspend or delay dividend payments, causing STRC prices to deviate significantly from par. If collateralization of apxUSD becomes insufficient, chain liquidations could be triggered.

From NASDAQ’s STRC to the three-layer on-chain yield structure, the crypto market is creating a new capital logic: Bitcoin as the underlying asset, NASDAQ responsible for price discovery, and DeFi for distribution and circulation of digital credit.

Saturn consolidates the monetary layer, Apyx enhances the yield layer, and Pendle dissects the interest rate layer—together forming the backbone of a digital credit system. Bitcoin is completing its leap from currency to asset, and further into a credit-backed foundation.

However, high yields always come with high risks, and in the ever-active Bitcoin capital market, leverage costs can often arrive unexpectedly.