DeFi Development Corp. (NASDAQ: DFDV) filed a preliminary prospectus with the U.S. Securities and Exchange Commission on Aug. 31 to offer 2.2 million shares of perpetual preferred stock called CHAD. The public offering price is set at $9 per share, below its $10 liquidation preference, with an initial 13% dividend rate. The company plans to make its first dividend payment on Oct. 1 and then pay dividends every business day. It also said it would reserve funds equal to 12 months of dividend payments.
The prospectus states plainly that the proceeds will be used for general corporate purposes, including the acquisition of SOL.
The filing arrives as crypto treasury companies are moving into a direct contest over yield products. Over the past six months, at least three such firms have brought the same type of instrument to Wall Street: high-dividend perpetual preferred shares used to raise capital for buying and holding crypto assets.
Three preferred shares, one escalating contest
STRC is the product launched by Strategy, formerly MicroStrategy. It carries a $100 liquidation preference, a current 12% dividend rate, and pays twice a month. Strategy has already spent $635 million buying back STRC, yet the security still trades around $97.34 and has not returned to par. To support it, the company set up a $4.65 billion U.S. dollar reserve pool.
SATA is Strive’s product. It also carries a $100 liquidation preference, but offers a 13% dividend rate and has paid every business day since June 16. The article describes it as the first income product in the history of listed U.S. securities to pay daily dividends. Strive has no debt, holds more than 15,000 BTC, and says that at current BTC prices its balance sheet can support SATA dividend payments for about 19.6 years. Since launch, SATA has largely held near its $100 par value.
CHAD is DFDV’s attempt to join that market. The differences are immediate. Its liquidation preference is only $10, compared with $100 for STRC and SATA. It is being offered at $9, below par. Its underlying asset is SOL rather than BTC. DFDV also carries about $216 million in combined debt and more than $200 million in accumulated losses.
The product design trend is easy to see. Dividend rates have moved from 12% to 13%. Payment frequency has gone from monthly to twice monthly and then to daily. Reserve funding, once built after launch, is now being locked in at the IPO stage. Each new issuer has added another layer.
Where the yield actually comes from
The article says the 13% annualized yield offered by these preferred shares does not come from the crypto assets themselves. BTC and SOL do not pay interest, distribute dividends, or generate cash flow.
Instead, it describes a simple chain: the company keeps issuing common stock through an at-the-market program, uses the proceeds to buy more crypto assets, relies on asset appreciation to support book value, uses that support to issue more stock, and directs part of the new proceeds toward preferred dividends.
In that structure, the dilution absorbed by common shareholders becomes the source of the preferred holders’ return.
When crypto prices rise, the cycle can reinforce itself. Asset values increase. Market capitalization rises. Issuance capacity expands. Dividend funding looks secure. Preferred shares stay near par. Credit perception holds. More preferred stock can then be sold.
When crypto prices fall, the process runs the other way. Asset values drop, market value shrinks, the ability to issue weakens, dividend pressure rises, preferred shares fall below par, reserve funds have to be used, and once those reserves run down, payment continuity comes into question.
The article says STRC is already in the early part of that reversal. Strategy still holds a large BTC position, but STRC has traded below its $100 par value since listing, pushing the company to launch a $1 billion buyback plan, of which $635 million has already been spent.
It also points to SATA’s 13% daily-pay structure as one reason STRC has struggled to regain par, since yield-sensitive investors now have a higher-yield alternative.
Why CHAD stands out on risk
Among the three products, the article places CHAD at the highest end of the risk range.
The first issue is the underlying asset. SOL is notably more volatile than BTC. Using a more volatile asset to support a fixed-income style product means mark-to-market losses can arrive faster and hit harder in a downturn.
The second issue is the balance sheet. As of the end of June, DFDV had $216 million in debt and accumulated losses of $203 million. In the capital structure, CHAD ranks behind all debt claims. It is senior to common stock, but junior to all creditors. By contrast, Strive has eliminated its debt entirely.
The third issue is governance. CHAD’s dividend rate is set by the board, and each adjustment is capped at 50 basis points. The prospectus explicitly states that the company can reduce the dividend rate at any time without the consent of holders.
The $10 par value is also notable. STRC and SATA are aimed at institutions and high-net-worth investors buying $100 securities. CHAD, priced at $9 with a $10 preference, looks more tailored to retail participation. The lower denomination cuts the entry threshold. The article also notes that under the same percentage swing in net asset value, the absolute loss per share is smaller, which may reduce the immediate pain felt by investors.
The race is over who breaks par first
The competition among these preferred shares is not really about who offers the highest yield, the article argues. It is about who can hold par value for longer.
STRC remains below $100 even after $635 million in buybacks. SATA has stayed around $100, but that stability depends on Strive’s debt-free balance sheet and its BTC holdings continuing to support the structure. CHAD has not yet listed, but it is being launched into a market where an earlier product is already under pressure on par value, while carrying higher leverage and a more volatile underlying asset.
For investors, the article frames these products as U.S. dollar-denominated fixed-income promises backed by crypto volatility. When crypto assets rise, the promise is easier to meet. When they fall, the cost is shared by common shareholders through dilution and by the company through reserve use.
Strive CEO Matthew Cole called SATA’s daily-pay structure “a true zero-to-one innovation in the history of the U.S. capital markets,” according to the article. It adds that innovation does not equal safety.
The CHAD filing includes a risk disclosure the article singles out in full: “We may not have sufficient funds to pay dividends in cash on the CHAD Stock, or we may choose not to pay dividends on the CHAD Stock.”
Put plainly, the company may be unable to pay the dividend, or may decide not to pay it.