Strategy’s selloff in its Stretch preferred shares is spilling into DeFi, putting two onchain dollar products with nearly $490 million in combined assets under strain.
According to Forbes, the pressure centers on Apyx and Saturn, two protocols that turned Strategy’s high-yield preferred shares into crypto-native income products. The issue comes as Michael Saylor’s company faces a tougher market backdrop and mounting questions over how it funds dividends, debt service and investor confidence.
Few companies have unsettled crypto investors as much as Strategy in recent weeks. The company remains the largest public holder of Bitcoin, with about $58.5 billion worth of BTC on its balance sheet.
In June, Bitcoin dropped below $60,000, its lowest level since October 2024. Strategy’s common stock slid from a record closing high of $473.8 to a low of $82, leaving the company with a market capitalization of about $28.5 billion. Its popular Stretch preferred shares, trading under STRC, also fell to $74, a $26 discount to their $100 par value. At that level, the annualized dividend yield rose to 12%, a level the report described as comparable to junk debt. With interest on $6.7 billion of convertible debt added in, Strategy now faces roughly $1.76 billion a year in preferred dividends and interest payments.
Strategy sold Bitcoin and raised equity to rebuild cash
Under that pressure, the company has stepped away from Saylor’s long-held “never sell” stance on Bitcoin. Strategy has authorized the sale of up to $1.25 billion in BTC to replenish cash reserves and cover those obligations.
Between late May and early July, it sold about $218.5 million worth of Bitcoin and raised nearly $1.85 billion by issuing additional common stock. Its cash balance has reached $3.75 billion, enough to cover about 2.1 years of current dividend payments. Saylor’s own net worth has also dropped, from more than $9 billion at the start of 2025 to about $3.3 billion recently.
Apyx and Saturn built onchain products around Stretch
Before the drop, Stretch had become attractive collateral for DeFi teams trying to turn its dividend stream into blockchain-based yield products. The two largest versions of that trade are Apyx and Saturn, which together manage close to $490 million.
Apyx has $307 million in gross reserves, while Saturn has $183 million in total value locked. Artemis analyst Zheng Jie Lim estimated that as of July 21, around $267 million was directly exposed to Stretch, including roughly $196 million at Apyx and about $72 million at Saturn. The rest of the reserves are mainly cash, tokenized Treasuries and protocol-owned assets.
Apyx’s synthetic dollar fell below $0.80 during the selloff
Apyx holds Stretch and cash in brokerage and custody accounts, then issues a synthetic dollar called apxUSD against those reserves. Unlike traditional stablecoins such as Tether’s USDT or Circle’s USDC, which are backed by cash and Treasuries and aim to hold a $1 peg, apxUSD does not guarantee a constant $1 redemption value. Its redemption price moves with the value of the reserve basket.
Investors seeking yield can deposit apxUSD into Apyx and receive another token, apyUSD, which passes through Stretch’s semi-monthly dividend income.
During the late-June selloff, apxUSD briefly traded below $0.80. By July 21, it had recovered to around $0.90 on secondary markets including Kraken and Curve. After excluding minted but unsold tokens and Apyx’s own liquidity, Artemis estimated that the protocol had about $233 million in reserves against circulating tokens worth about $257 million, leaving coverage at 90.7%. In practical terms, investors who treated the token like a near-dollar were sitting on a paper loss of around 10%.
Stretch makes up 84% of Apyx’s reserves. Eligible investors who redeem apyUSD through Apyx also face a wait of about 20 days.
Token Terminal data shows the operating entity behind Apyx is registered in the British Virgin Islands. Its main backer is DeFi Development Corporation, described in the report as the first publicly traded crypto treasury company built around accumulating Solana. The report added that Solana has nearly halved since the start of 2026, while DeFi Development Corporation’s stock has fallen from $42.50 in May last year to about $2.70 recently.
Saturn uses Stretch to support its yield-bearing token
Saturn uses a different structure. Its stablecoin, USDat, is backed by tokenized Treasuries. Investors seeking more yield can swap into sUSDat, the yield-bearing version, which is backed mainly by Stretch preferred shares.
As of July 21, Stretch accounted for about 94% of sUSDat reserves, and each sUSDat was worth roughly $0.90 USDat. The protocol advertises yields as high as 27.5% annually, but only 12 percentage points of that figure come from Stretch’s dividend. The remainder assumes Stretch can climb from about $87 back to its $100 par value.
PitchBook data cited by Forbes says Saturn is headquartered in Philadelphia, was incubated by YZi Labs and has raised backing from Spartan Group and Anchorage Digital. Both Apyx and Saturn restrict access by jurisdiction and bar U.S. users. Eligible users can buy through the protocols’ own websites and trade the related tokens on crypto venues such as Curve and Pendle.
Leverage loops increase liquidation risk
Maple Finance co-founder and CEO Sid Powell said buyers, many of them retail investors and seasoned yield funds, still have reasons to hold on. Early buyers may prefer to keep collecting Strategy-linked dividends rather than sell at a loss. Newer buyers may be betting that larger cash reserves at Strategy could help push Stretch back toward $100. If interest rates keep falling, a 12% dividend could look more attractive, assuming it remains sustainable.
The protocols also show how DeFi can stack speculative layers on top of a single underlying bet. On Morpho, investors can post Apyx and Saturn tokens as collateral, borrow other digital dollars, and buy more yield-bearing tokens, repeating the cycle. In crypto markets, that is a looping strategy: borrowing to add more exposure.
The same tokens can also be split on Pendle into separate claims on principal and future yield. Glenn Cameron, global head at Dallas-based Bitcoin custody and advisory firm Onramp Institutional, said, “This is exactly the same as stripping a bond into principal and coupon.” Some of those positions can then be posted into lending markets again, allowing traders to borrow more dollars, buy more tokens and continue the loop.
Some paths advertise annualized yields as high as 40%, and Saturn’s website distributes reward points to participants. Forbes noted that these investments sit offshore and are not currently being watched by U.S. regulators.
Liquidations have started, though losses remain contained for now
Leverage works just as efficiently on the way down. When Stretch falls, reserve values drop, token prices follow, and loan collateral weakens. Once a borrower’s collateral value slips below Morpho’s threshold, outside liquidators, usually automated bots, can repay the debt and seize the collateral at a discount. If that collateral is then sold into a market already full of anxious sellers, prices can fall again and trigger more liquidations.
“Because they’re levered, Stretch doesn’t have to fall that much to start triggering cascading liquidations,” Cameron said.
Artemis counted 116 liquidations tied to Apyx and Saturn collateral between early June and July 16, covering about $7.2 million in loans. Nearly all of that debt was recovered. Still, Artemis estimated that if the tokens fell another 10%, and borrowers neither repaid nor posted more collateral, as much as $5.7 million of Apyx-related debt could enter the liquidation zone.
Powell said the protocols remain fragile as long as Stretch trades below par. He pointed to the late-June drop in the preferred shares as the event that knocked Apyx’s synthetic dollar off its peg-like level. Apyx and Saturn did not respond to Forbes’ requests for comment. Powell also said Maple had turned down about half a dozen loan requests secured by Stretch or tokenized versions of it because of the volatility.
Even so, he does not see Apyx or Saturn as the spark for a wider crypto crisis. They do not create new legal obligations for Strategy, he said, and Stretch has not spread widely enough through DeFi to produce major contagion. “It’s not integrated enough into DeFi yet,” he said.
The bigger risk may feed back into Stretch itself
The larger threat may come if redemptions in the DeFi wrappers force reserve sales back into the underlying preferred shares. Apyx and Saturn could be pushed to sell reserves if investors rush to exit, adding pressure to Stretch. That, in turn, could leave Strategy under renewed pressure to raise the dividend again or buy back shares to support demand.
“That would increase Strategy’s cost of capital,” Powell said.
Matt Cole, CEO of Strive, said traditional brokerages cutting client borrowing lines, rather than DeFi, were probably the bigger source of early forced selling. Strive holds about $44 million of Stretch and has issued its own perpetual preferred shares. “DeFi has learned a lot over the years about leverage. People get wiped out when they overleverage,” Cole said. “This drop in STRC and broader digital credit is a reminder to investors to be especially careful with looping leverage.”
Strategy changed the way it presents mNAV
Saylor has also been trying to address pressure on Strategy’s common stock valuation. The shares recently traded around $92, down about 78% over the past year. Using the controversial mNAV measure Saylor previously promoted, defined as common equity market value divided by the value of the company’s Bitcoin, the stock is now trading at a 33% discount to Bitcoin value.
For years, Strategy’s mNAV stayed comfortably above 1.0, allowing the company to issue stock at prices above the Bitcoin-backed value and use the proceeds to buy more BTC. On July 23, Strategy said on X that it would abandon the old formula and adopt a new method that puts the ratio slightly above 1.0. “Bitcoin capital markets need a new financial language,” Saylor said.
Under the revised formula, mNAV is calculated as share price divided by “Net Bitcoin Per Share,” which takes the value of the Bitcoin treasury, subtracts the par value of out-of-the-money convertibles and preferred stock, adds dollar reserves earmarked for dividends, and then divides by the fully diluted share count. By that method, the ratio comes out to 1.02.
Cameron disputed the change. “The only version that shows a discount is the one they never use, and that’s the one investors should be looking at,” he said. “Nothing in reality changed. Only the mNAV metric they invented changed.”
Views on the outlook remain divided
Dave Weisberger, co-founder of algorithmic trading platform CoinRoutes, said, “I expect Stretch to keep trading at a discount until Bitcoin breaks out of its current range, roughly the high-$50,000s to high-$70,000s. If Bitcoin crashes, it will go lower.”
Still, Weisberger argued that Strategy’s recent moves have “basically reversed the death spiral.” Bears had assumed Bitcoin sales would crush the market, force more selling, and eventually shut Strategy out of capital markets unless BTC rebounded. Instead, the company sold Bitcoin without a major price break, then raised equity and built up nearly two years of cash coverage. “Neither disaster scenario happened,” he said.
Cameron offered a harsher reading. “Strategy doesn’t have to go bankrupt for investors to get hurt,” he said. In his view, the company’s real mNAV has compressed to 0.67, Bitcoin is down, and shareholders continue to be diluted. Getting back to their original investment levels could take a long time.