Author: Nathan Ma

Co-founder and CEO of DMZ Finance

In my previous article (Original link), I mentioned that current tokenization projects in the U.S. stock market—such as Ondo and xStocks—are overall underperforming; all projects combined have only achieved $1.1 billion, representing just 0.0015% of the total U.S. stock market cap, with dismal figures. But before the words were even out, a new hope arrived in the village.

Not another story about moving stocks on-chain, but a completely different approach: tokenizing the yield characteristics, not the trading attributes, of stocks. STRC, a preferred share from Strategy (formerly MicroStrategy), listed on Nasdaq, pays monthly dividends with an annualized yield of 11.5%. This “Bitcoin credit card” is already powerful in traditional markets. But DeFi thinks it’s not enough—it needs to be moved on-chain and layered with even more wrappers. Currently, the two largest on-chain wrappers for STRC, Saturn Credit and Apyx Finance, have locked over $260 million combined.

What are they actually doing? Is the valuation reasonable? What are the risks?

First, find out what STRC is.

Let’s look at these numbers: STRC, since its listing in July last year—just nine months ago—has become the world’s largest preferred stock by market cap, with AUM of $8.5 billion, an average daily trading volume of approximately $375 million, and price volatility reduced to 3%. Strategy has raised $5.6 billion through STRC since 2026—and all of this was accomplished during a Bitcoin bear market.

STRC is a perpetual preferred stock issued by Strategy, with a par value of 100 and no maturity date, paying dividends monthly. The dividend rate is not fixed—Strategy’s board adjusts it monthly with the goal of keeping STRC’s secondary market price close to its 100 par value. If the price falls, the dividend rate is increased to pull it back up; if the price rises, the dividend rate is lowered to bring it down.

Starting from a 9% dividend yield at its listing in July last year, it has now been adjusted to 11.5%. The dynamic dividend adjustment mechanism is an inherent design feature of STRC—using monthly rate adjustments to anchor the price to its $100 face value, similar to how a central bank uses interest rate tools to manage exchange rates. This mechanism has worked effectively so far, with STRC maintaining price stability near its face value, a notable achievement for a brand-new financial product. Of course, the cost of dividends for Strategy has been steadily rising, and its long-term sustainability warrants attention.

Underlying logic: STRC dividends originate from Strategy’s funding capacity, which is highly correlated with BTC’s price. When BTC rises → Strategy’s balance sheet strengthens → continued issuance of equity and debt to buy more BTC → sufficient funds to pay dividends. This creates a positive feedback loop, but the reverse can also become a stress test.

Saturn Credit: A layered cake of government bonds and STRC

Product Design

Saturn divides the product into two layers:

• USDat: An interest-bearing stablecoin minted and redeemed 1:1 with USDC, backed by tokenized U.S. Treasuries (M0). Holding USDat = zero STRC exposure, pure U.S. dollar liquidity.
• sUSDat: A yield vault minted by staking USDat. Saturn has replaced the underlying assets from Treasury bonds to STRC, with dividends automatically accumulating and pushing up the sUSDat/USDat exchange rate. Currently, approximately 88.5% of the sUSDat vault consists of STRC, and 11.5% is USDat liquidity buffer.

Simply put: USDat is the safety layer, sUSDat is the risk layer. Stake to earn STRC rewards, or hold USDat as a stablecoin if you prefer to avoid risk.

The hierarchy looks clean, but several key issues aren't clearly addressed.

Question 1: Whose "treasury bonds" is USDat buying?

Saturn says USDat is backed by "tokenized U.S. Treasuries," but which specific product is being purchased? BUIDL, Benji, or QCDT? No further disclosure is provided.

Question 2: How is a treasury bond “converted” into STRC?

When users stake USDat to receive sUSDat, Saturn says the underlying shifts from U.S. Treasuries to STRC exposure. How does this conversion work?

If you directly sell Treasuries to buy STRC, the underlying Treasuries backing USDat would be drained—what supports the "safety layer" for holders of uncollateralized USDat?

If leveraging by using government bonds as collateral to buy STRC—in a traditional financial environment, the cost of borrowing is likely higher than the interest rate on government bonds (inverted yield curve), and no related collateral data is visible on-chain.

So in reality, USDat’s “treasury-backed” claim may not be as solid as advertised. It may ultimately be no different from Apyx’s apxUSD—both are essentially packaged STRC exposure, differing only in degree and transparency.

Data

• TVL: ~$125 million (tripled from $40 million in one month since mainnet launch)
• sUSD APY: Actual yield ~9.5-9.8% (below the stated 11.5% for STRC due to friction costs)
• Redemption cycle: sUSD requires a 3-7 day queue upon withdrawal.
• Audit: Three Sigma + Certora dual audit
• Geographic restrictions: Not available in the United States, EEA, or OFAC-sanctioned regions.

Funding and Valuation

• Early on, received $800,000 from YZi Labs and Sora Ventures
• $2 million seed round led by Spartan Group, with participation from Anchorage Digital and Susquehanna Crypto
• Valuation has not been publicly disclosed. A total of $2.8 million was raised across two rounds, but the specific valuation was not stated. Referencing Apyx’s $300 million valuation and similar TVL size, Saturn’s implied valuation may be in the $200–300 million range—but this is speculative and not an official figure.

Known risk events

On April 14, the STRC ex-dividend date. STRC’s price normally retraces (temporarily drops after the ex-dividend event), but this retracement pulled the sUSDat exchange rate below Pendle’s set threshold. Result: Pendle was forced to pause sUSDat yield calculations.

Pendle was forced to clarify: "The yield of YT-sUSDat was paused due to the STRC dividend event."

This is not a bug, but it reveals a structural issue: STRC’s monthly dividend distribution → temporary price drop → decline in the sUSDat exchange rate → disruption of pricing mechanisms in downstream DeFi protocols. This issue repeats every month.

Apyx Finance: An Account That Doesn’t Add Up

Product Design

Apyx also has a dual-coin structure, but with a different pathway:

• apxUSD: A synthetic USD minted through overcollateralization of STRC and Strive's SATA preferred shares. It does not generate yield on its own and is used for DeFi liquidity and collateral.
• apyUSD: A yield token received after locking apxUSD. All underlying dividends are distributed exclusively to apyUSD holders—since not all apxUSD holders choose to stake, the yields for apyUSD are leveraged and amplified.

Key difference from Saturn: Saturn’s USDat is backed by U.S. Treasuries (zero STRC exposure), while Apyx’s apxUSD is directly backed by STRC + SATA. apxUSD appears to be a stablecoin, but at its core, it’s preferred stock in disguise.

Data

• TVL: apxUSD has a circulating supply of 331.8 million, and apyUSD has a circulating supply of 114 million (source: DefiLlama)
• STRC accounts for ~90%, and SATA for ~10%.
• Total collateral: $110.9 million vs. circulating supply of $109.6 million, over-collateralization ratio ~101.2%
• apyUSD 30-day average annualized ~11.1%, target >13%
• Redemption cycle: 30-day cooling period for apyUSD
• Already listed on Kraken

Funding and Valuation

• Valued at $300 million, funding completed.
• Backed by Nasdaq-listed DeFi Development Corp (DFDV)
• The core team comes from Kraken, including former CSO Joseph Onorati.
• No VC dump risk—the official statement is “deliberately not taking VC funding.”

A $300 million valuation versus a $136 million TVL results in a valuation-to-TVL ratio of approximately 2.2x. For a protocol that has only been live for a few months, this multiple isn’t unreasonable—but only if TVL can be maintained and grow. If STRC encounters issues that cause TVL to decline, this valuation could quickly become unsustainable.

APYX tokenomics

The total supply of APYX is 100 million tokens, with a fixed supply and no inflation. 50% of the monthly reserve growth is distributed to APYX stakers, while the remaining 50% is retained in the reserve to accumulate an over-collateralization buffer. Team tokens vest over four years.

A noteworthy income source: Apyx plans to purchase DAT’s newly issued preferred shares at a discount (e.g., buy $100 face value for $80) and profit from the price appreciation once the shares rise to par value—similar to the logic of subscribing to new issues in the primary market.

[Question about yield figures]

According to DefiLlama data, apxUSD has a circulating market cap of $331.8 million, and apyUSD has a circulating market cap of $114 million. If the underlying assets of apxUSD were truly all purchased in STRC (assuming STRC’s 11.5% annualized dividend, ignoring the approximately 10% SATA holding), then:

Annual total dividend income: $331.8 million × 115.3816 million, but these earnings are distributed only to apyUSD holders ($114 million), so the theoretical APY should be: $115.3816 million ÷ $114 million ≈ 33.5%

However, the official APY for apyUSD shows only ~13%. The discrepancy of about 20 percentage points, approximately $23.4 million per year, is unaccounted for. Two possibilities: either the project team is withholding a significant portion—or the reported 6.03318 billion circulating supply is highly inflated, with the actual underlying holdings far fewer STRC tokens; the circulating supply may include minted amounts not actually deployed, internal transfers, or even air supply with no underlying assets backing them.

Regardless of the interpretation, investors should remain cautious.

STRC's Dividend Sustainability: Why There's No Need to Overly Worry Right Now

Whether Saturn or Apyx, both are fundamentally anchored to the same thing: whether Strategy can distribute STRC dividends on time each month.

Several dimensions for judgment:

1. BTC reserves far exceed the total of debt and preferred shares

The Strategy holds 818,334 BTC, with a current value of approximately $62 billion+. Total debt ($7 billion) plus the total par value of preferred shares (~$10.3 billion) amounts to less than $18 billion, resulting in a BTC reserve coverage ratio of over 3x. As long as BTC does not fall below $15,000, solvency will not be at risk.

2. Financing capacity remains strong

Since the beginning of 2026 alone, Strategy has raised $5.6 billion through STRC. While the company’s annual operating revenue ($480 million) indeed does not cover the annual interest on STRC (~$980 million), Strategy’s business model was never designed to pay interest from operating income—it relies on its capital market financing capabilities and BTC appreciation. As long as BTC remains at its current price, this flywheel spins smoothly.

3. The dynamic interest adjustment mechanism operates effectively

Adjusted seven times from 9% to 11.5%, the STRC price remained anchored near its $100 face value. This mechanism demonstrates Strategy’s ability to regulate market supply and demand. With a daily trading volume of $375 million and a volatility rate as low as 3%, its liquidity and stability are unmatched among preferred stock categories.

4. The Other Side of the CEO's Statement

Although Strategy Q1's financial report showed a net loss of $12.54 billion (due to fair value changes in BTC, non-cash), the CEO mentioned “possibly selling some BTC to pay dividends.” But viewed differently: the willingness to use BTC reserves to secure dividends clearly indicates that management places a very high priority on preferred dividend payments. Selling a small portion of the 818,334 BTC holdings would be sufficient to cover dividends for several years.

Of course, the risk is not zero. If STRC falls below par: Saturn’s sUSDat exchange rate would decline proportionally; Apyx’s apxUSD has an over-collateralization ratio of only 101.2%, leaving minimal buffer. However, at current BTC price levels, these scenarios represent extreme tail events.

Leverage stacking: 11.5% isn't enough, need 64%

Saturn and Apyx themselves have relatively restrained product designs. But their users do not hold back—or rather, they have created an ecosystem that encourages users not to.

On-chain actions that have actually occurred:

1. Earn ~11% APY on sUSD at Saturn/Apyx
2. Deposit into Pendle to lock in a ~14.8% fixed yield with PT
3. Use PT as collateral to borrow USDC on Morpho (borrowing rate ~1.6%)
4. Repeat step 1 using borrowed USDC
5. Cycle 5 times → 64% APY

This is not an issue with Saturn or Apyx, but rather with their ecosystem. When the STRC dividend date causes the sUSDat exchange rate to drop, leveraged positions in the cycle are liquidated first, and these liquidations further depress the price, creating a negative feedback loop.

In conclusion

What Saturn and Apyx are doing is inherently valuable: enabling 500 million stablecoin users worldwide to access high-yield preferred stocks listed on Nasdaq. This is one of the most cutting-edge experiments in the RWA narrative.

But be clear on three things:

First, this is not a stablecoin. Whether it's called USDat or apxUSD, its underlying exposure is to STRC preferred shares, not the US dollar. One pretends to be, the other doesn't even pretend—having "USD" in the name doesn't make it stable.

Second, the sector has room to grow, but the barrier lies in compliance. Strategy’s official disclosures show that the current on-chain tokenization ratio of STRC is only 2.7%. Even reaching 20% would imply substantial upside potential. Competitors are beginning to emerge in the market. However, the real barrier is not who gets on-chain first, but whether compliance is robust enough to earn the trust of institutional clients and large capital. Currently, the TVL of Saturn and Apyx is still primarily driven by retail investors, falling short of institutional-grade credibility.

Third, can the project maintain restraint? The history of DeFi is filled with too many lessons—layered collapses, protocol hacks, and liquidity runs, the usual suspects. Saturn and Apyx have significant flaws on the stablecoin side (analyzed previously), and on the yield side, their ecosystem stacks up a 64% APY looped leverage on Pendle + Morpho—both ends are cause for concern. Let’s hope we don’t see the same script play out again: “higher yield, faster collapse.”

Saturn and Apyx have proven one thing: the most valuable direction for U.S. stock tokenization is not trading speculation, but unlocking asset characteristics—on-chain users can access the cash flows from high-yield Nasdaq products, and this path is correct. However, overlaying too many DeFi feedback loops too early, stacking leverage upon leverage, has turned a strong hand into a concerning one.

The direction is correct; if you want to go the distance, it still comes down to two things: solid compliance and rational restraint from project teams.