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DeFi traders are stacking risks on top of Strategy’s risky STRC

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DeFi traders are stacking risks on top of Strategy’s risky STRC

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.

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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.

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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.

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Read more: We calculated the present value of STRC — it’s bad for MSTR

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.

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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. 

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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.

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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.

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Solana price forms bullish double bottom, eyes upside to over $110 on breakout

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Solana price is forming a double bottom pattern on the daily chart.

Solana price has rebounded by 6% since its Monday drop as investor confidence returns to the market. It is in the process of forming a double bottom pattern, which could position it for a significant trend reversal in the coming sessions.

Summary

  • Solana rose to $88.5 as market sentiment improved, supported by easing geopolitical tensions and rising trading volume.
  • The token is forming a double bottom pattern, with a breakout above $97.8 potentially targeting $118.
  • Liquidation data shows $20.5 million in short positions near $91, raising the likelihood of a short squeeze on further upside.

According to data from crypto.news, Solana (SOL) price rose 3% to $88.5 on Wednesday, bringing its market cap to over $50 billion. Its gains came amid its daily trading volume rising by 22% to $4.96 billion.

Solana price rose after U.S. President Donald Trump announced an extension of the Iran ceasefire, easing broader macro fears and leading to a relief rally across the entire crypto sector.

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The token has also benefited from institutional players doubling down on the token. Notably, Goldman Sachs recently disclosed that it holds $108 million in spot Solana ETFs. At the same time, assets in Solana spot ETFs, including those from Bitwise and Fidelity, have now surpassed $1 billion.

Solana is now in the process of completing a double bottom pattern on the daily, a setup that typically signals a bullish reversal on breakout from the neckline of the pattern. For Solana price, the neckline stands at $97.8, just 10% above the current price.

Solana price is forming a double bottom pattern on the daily chart.
Solana price is forming a double bottom pattern on the daily chart — April 22 | Source: crypto.news

A decisive breakout could position the token for an upside to $118 with no more major resistance levels on the way. The target is calculated by adding the height of the double bottom formed to the point at which the breakout occurs.

Meanwhile, the Solana weekly liquidation heat map shows a large cluster of dense liquidity at $91, where more than $20.5 million in short positions are currently sitting. If the price reaches this level, it could trigger a short squeeze that accelerates the move toward the neckline.

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Coinbase Shifts NY Prediction Markets Case to Federal Court

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Coinbase Shifts NY Prediction Markets Case to Federal Court

Coinbase’s chief legal officer, Paul Grewal, said Wednesday that the company had removed New York Attorney General Letitia James’ prediction markets lawsuit from state court to federal court, arguing that the case turns on disputed questions of federal law over how event contracts are regulated.

The move escalates a legal fight that could help define whether prediction markets fall under federal commodities regulation and the scope of the US Commodities and Futures Trading Commission’s (CFTC) or state gambling laws, with broader implications for the oversight of platforms like Coinbase and Gemini.

“We have removed this action to federal court,” wrote Grewal in a Wednesday X post, adding that New York’s claims raise “disputed and substantial questions of federal law” and are subject to “complete preemption.”

It comes in response to a Tuesday lawsuit filed by New York’s Attorney General Letitia James against Coinbase Financial Markets and Gemini Titan, alleging their prediction market offerings violate New York gambling law by allowing users to bet on sports, entertainment and elections without a state gaming license, including users between 18 and 20 years old.

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Related: Kalshi, Polymarket face trading halt in Nevada after court rulings

The lawsuit seeks fines, forfeiture of alleged illegal profits and restitution for customers, while also asking the court to stop the companies from offering similar products in New York without complying with state law.

Cointelegraph has approached Coinbase for comment on the matter and a copy of the court filing.

Notice of Removal. Source: Paul Grewal

State regulators battle for prediction markets jurisdiction

State regulators have stepped up pressure on prediction market platforms in recent months, with 11 states having pursued legal action against them, seeking to assert control over federal regulators.

Coinbase’s Grewal said in a Tuesday X post that prediction markets are “federally regulated national exchanges” under the CFTC and the company will continue to “fight for the federal oversight of these markets that Congress intended.”

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Coinbase launched prediction markets across 50 US states, including New York, on Jan. 28, offering trades on “any real-world outcomes” across sports, politics, culture and more.

The New York Attorney General’s lawsuit is the latest sign that state regulators are seeking to assert their jurisdiction over emerging prediction markets, contradicting the CFTC’s stance, which said it has exclusive jurisdiction over prediction markets registered as designated contract markets, such as Polymarket and Kalshi. 

On April 2, the CFTC filed three separate lawsuits against the gaming regulators of Illinois, Connecticut and Arizona, arguing that those states could not apply their gambling laws and licensing requirements to event contracts listed on CFTC-regulated platforms.

On April 8, the CFTC and US Department of Justice (DoJ) asked a federal court to block Arizona from enforcing state gambling law against Kalshi’s event contracts, arguing that they fall under the CFTC’s exclusive authority.

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