Strategy (formerly MicroStrategy) already pays an 11.5% annualized dividend on its ultra-risky Stretch (STRC), but DeFi users are now adding risk and leverage to boost that to 39%.
In the financial sector, interest rates are often determined by the risk of total loss. If someone offers a higher interest rate, with some exceptions, they are much more likely not to pay you back.
Unbothered, traders now route Strategy’s dividend payments through multiple blockchain protocols to produce yields double, triple or more of what STRC actually pays.
They add future liabilities in exchange for short-term payouts, take advantage of temporary incentives for obscure DeFi protocols, and add exotic forms of leverage to increase the notional exposure of an otherwise small investment.
In the peculiar underworld of the tokenized STRC, there are at least five protocols that provide the financial machinery for DeFi farmers, not to mention the risks posed by the administrators and technology providers involved in these protocols.
A series connection of DeFi threatens to strengthen STRC
Apex packages approximately $136 million worth of STRC into a synthetic stablecoin-like token called apxUSD. Saturn STRC is packaging approximately $85 million worth of its USDat product. Another tokenization protocol xShares put approximately $53 million worth of STRC into the chain.
In the meantime, Shuttle Finances splits these STRC tokens and the dividends paid to STRC shareholders into separately tradable fixed-rate and floating-rate components, and Morpho ultimately provides for the loan looping mechanism to add even more financial leverage to these instruments.
By depositing assets to borrow these tokens, which trade under various ticker symbols such as STRCx, apyUSD, apxUSD, USADT, sUSADT, strcUSX, traders borrow tokens, re-deposit some of those loan proceeds to close more loans, re-deposit some of those loan proceeds to close more loans, and so on.
The more loops and the smaller the price range a user pledges, the more likely the protocol will forcibly liquidate the position.
Irresponsible dividends, reinforced
STRC’s base yield without any tokenization is already extreme. STRC pays 11.50% annually, about 450 basis points above the average junk bond.
Strategy has increased its dividend rate seven times since launching STRC at 9% in July 2025.
Each rate hike tacitly admitted that demand at the previous rate was too weak to keep STRC’s secondary trading on the Nasdaq at its target $100 per share.
STRC controversy goes mainstream
Rather than loosening leverage in the face of the increasingly thin air, DeFi’s response has been to view 11.5% as a stable case upon which even higher tricks can be constructed.
Apyx Finance closed a $300 million valuation round in February as a self-proclaimed dividend-backed stablecoin protocol.
It issues apxUSD, backed by STRC and a related preference like Strive’s STRC-like SATA, with apyUSD as the yield-bearing version of the same claim. Saturn Credit raised $800,000 in January from Sora Ventures and Changpeng Zhao’s YZi Labs to run the same game through USDat and sUSDat.
Both STRC tokenizers package their resulting tokens in Pendle, where PT-apyUSD locks in fixed yields of approximately 14.84%.
Users then deposit these PT tokens into the Defi protocol Morpho as collateral to borrow USDC at rates as low as 1.59%.
The arithmetic is not subtle. A 5x leverage ended up with an APY of 64%. A separate analyst account documented an APY of 39%.
Hoping and praying STRC never sticks around for long
On April 14, STRC approached its monthly dividend snapshot, going “ex-dividend” in Wall Street parlance, causing the stock to fall. That drop pushed the sUSdat exchange rate below the high-water mark that Pendle uses to manage yield accrual for the Saturn token.
Pendle had to explain this basic phenomenon to its users. “YT-sUSDat yield accrual is currently paused due to STRC’s April 14 ex-dividend event, which pushed the exchange rate below the waterline,” the report said.
It reassured holders that “if STRC recovers to $100, the watermark will be recaptured, revenue accrual will resume and your total earnings will ultimately be unaffected.”
As always, the conditional ‘if’ does a lot of the heavy lifting.
If STRC trades near $100 and pays a near 11.5% dividend forever, everything will work out wonderfully.
In fact, STRC dropped to $90.52 on November 21, 2025, and to $93.10 in February 2026. That’s why the dividend rate is where it is now. It should be no mystery why Strategy needs to pay such a higher dividend.
Unfortunately for STRC DeFi traders, neither is guaranteed. The quasi-peg has already failed twice in the last six months. In addition, Strategy’s board of directors may reduce the dividend at its discretion.
DeFi traders are also exposed to numerous protocol, blockchain, smart contract, and custodian risks that compound these risks.