Bitcoin Magazine

Strive’s SATS: How 15% Yield Becomes A Bitcoin Accretion Machine

Strive’s newly IPO’d SATS perpetual preferred stock introduces an interesting opportunity: the company could potentially issue preferred equity above its $100 stated amount and grow Net Bitcoin Per Share (Net BPS) in each issuance round, subject to risks and parameters described below. 

This article discusses how and why it works. The key question is whether SATS will trade above $100. Its unusually high 15% fixed dividend makes that outcome, and the subsequent accretion, plausible.

Why SATS could trade above par

SATS carries a fixed annual dividend of $15 per share, based on its $100 stated amount and its 15% number. It ranks junior to Strive’s SATA preferred stock, but its dividend structure offers investors two attractive features. 

First, SATS dividends are cumulative. Strive can defer payments, but any unpaid dividends accumulate as an obligation to preferred shareholders. 

Second, the $15 annual dividend is fixed. This differs from SATA, which currently pays an annualized $13 per share but uses a variable dividend rate. Therefore, SATA shareholders could receive less income in the future if Strive reduces that rate. SATS dividends accrue at a fixed $15 per share per year, but are payable only “when, as and if” declared by Strive’s board, and may be deferred. 

These features could make SATS particularly attractive to investors seeking predictable long-term income.

Consider Strategy’s STRD, the company’s juniormost preferred. STRD currently trades around $71 per share, 29% below its $100 stated amount. Its fixed $10 annual dividend translates into an effective yield of 14%. STRD dividends are also non-cumulative, meaning Strategy can skip payments without creating an obligation to repay those amounts later.

Admittedly, Strategy has significantly stronger Bitcoin asset coverage supporting STRD than Strive has supporting SATS. In fact, STRD’s 4.7x BTC Rating has twice as much asset coverage as SATA, Strives most senior instrument. 

That said, many income investors may place greater weight on dividend reliability than on coverage ratios. SATS offers cumulative dividends and a substantially higher stated yield, creating a reasonable case for the market to price its effective yield below that of STRD.

For example, if investors bid SATS to a 13% effective yield, its market price would reach $115.38.

This leads to an interesting financing opportunity for Strive.

The Net Bitcoin Per Share opportunity

Suppose SATS trades at $115 and Strive issues another 1 million shares through an at-the-market offering.

Strive raises $115 million in gross proceeds and buys Bitcoin.

However, under a Net BPS methodology that deducts preferred stock at its $100 notional amount, those new shares create only $100 million in additional preferred claims.

The remaining $15 million flows directly into the calculation of net Bitcoin attributable to common shareholders.

Under these parameters, Strive effectively raises $115 of capital for every $100 of preferred notional it creates. The annual dividend remains $15, producing an effective financing cost of 13.04% on the capital raised.

Strive can achieve this accretion without issuing additional common shares.

There is one caveat to mention: SATS has a floating liquidation preference that adjusts based on recent market prices. If SATS trades at $115, its liquidation preference can rise toward $115, temporarily increasing the economic claim held by preferred shareholders. However, liquidation preference can also reset downward. The formula references the previous trading day’s closing price during periods surrounding new issuance and the average closing price over the preceding 10 trading days, subject to a $100 floor. If SATS subsequently trades at $100 for 10 trading days, its liquidation preference returns to $100. 

While SATS trades above par, the higher liquidation preference offsets some or all of the apparent economic accretion. Once the preference returns to $100, the company retains the additional capital raised above par while the preferred liquidation claim falls back to its stated amount. 

But here’s the thing. The exact liquidation preference number only becomes relevant if the company is going to liquidate. And this would only happen if the company goes bankrupt. But if the company goes bankrupt, the preferred stock will almost certainly go below $100, which would make the liquidation preference return to $100. In other words, the caveat of the floating liquidation preference actually does not matter when you look at everything in context—it is perfectly valid to use $100 per share as the de facto notional value to compute Net BPS. (Note also that Net BPS is defined by Strategy, and not a metric explicitly reported by Strive. Strive’s prospectus also identifies tax risks that may arise if shares are issued above the liquidation preference, including deemed distributions, disqualified preferred stock treatment, and fast-pay stock treatment.)

The above-par issuance premium can therefore become genuine residual asset value for common shareholders, when we consider the Net BPS metric. 

This could possibly be one of the main reasons Strive decided to go as high as 15%. The high dividend gives it a greater chance of going above par and enabling the aforementioned mathematically guaranteed Net BPS accretion. 

15% Cost of Capital? 

Of course, this strategy relies on the market price of SATS.

At $115, Strive effectively raises capital at a 13% annual dividend cost. At $100, that cost rises to 15%. At $90, the effective cost climbs to 16.67%, while issuance also becomes dilutive under a Net BPS calculation.

Strive should therefore exercise considerable discipline when issuing SATS through an ATM program. Locking mid-to-high-teens costs of capital would only work out well if the return on capital from Bitcoin is massive and if volatility drag does not become a big issue. 

Strive also intends to maintain an 18-month dividend reserve equivalent to $22.50 per SATS share, adding another capital allocation consideration. 

Assuming the company maintains 18 months of dividend coverage, it would need to set aside $22.50 for each share it sells. Assuming it sells at par, that means 22.5% of the money raised must sit in cash equivalents while the remaining 77.5% can be deployed into Bitcoin. Therefore, we can see that the true cost of capital when accounting for the drag of being able to use only 77.5% of your financing is higher than the effective yield at which shares were issued. 

All these considerations need to be managed carefully. 

The key question

SATS may become one of the most expensive digital credit instruments on a stated dividend basis, while simultaneously becoming one of the more attractive financing tools for the Net BPS metric.

If investors consistently value SATS at an effective yield below 15%, then Strive could issue shares above par, purchase additional Bitcoin, and may generate Net BPS accretion under this methodology.

If SATS struggles to maintain a premium, this situation would not apply.

The opportunity lies in the difference between the $100 stated amount and the price income investors are willing to pay for a fixed, cumulative $15 annual dividend.

That spread could become a valuable source of accretion for ASST shareholders.

Disclaimer: Strive, Inc. (“Strive”), the issuer of the securities discussed here, is a member of Bitcoin For Corporations (“BFC”) and pays membership fees to BFC. Strive did not review this article before publication. This article was written by Allard Peng and reflects the author’s own opinion. Scenarios, prices, and yields are hypothetical illustrations, not predictions or guarantees. “Net Bitcoin Per Share” is the author’s methodology, not a Strive-reported metric. Third-party data is as of 21 October 2026 from Strategy.com, Strive.com. 

This article is for informational purposes only. It is not investment, legal, or tax advice, or an offer or solicitation to buy or sell any security. SATS Stock is offered only by Strive’s prospectus supplement and accompanying prospectus; read them, including the risk factors, before investing. Investing in preferred stock and bitcoin-related securities carries substantial risk, including loss of principal and the risk that dividends are not declared or paid.

This post Strive’s SATS: How 15% Yield Becomes A Bitcoin Accretion Machine first appeared on Bitcoin Magazine and is written by Allard Peng.

Bitcoin Magazine

Understanding Digital Money and Digital Yield

The new business model of building on top of digital credit to create digital money and digital yield can be roughly categorized into two different architectures. 

1. Debt-based, tranching structures 
2. Full-reserve, spendable balance structures 

This article gives a general overview of these models, with an analysis of economic implications. 

Digital Credit, Digital Money and Digital Yield 

To get started, I will define these terms. Digital Credit is the credit-like instruments issued by corporations with large Bitcoin balance sheets. Today they are five Nasdaq-listed perpetual preferred equity—STRC, SATA, STRK, STRF, STRD—and all five are the top five most liquid preferred equity securities in the United States. Digital Credit is L2 because it is built on top of Bitcoin, which is L1. 

Digital Money and Digital Yield are the L3 products that could be built on top of Digital Credit. 

Now obviously, Bitcoin is Digital Money. In this article I am using the terms popularized by Michael Saylor in corporate bitcoin discourse to describe the economic ecosystem that is emerging on top of public company issuance of Bitcoin-linked securities. 

Under that paradigm, Digital Money refers to something that holds a very stable fiat-denominated value that is built on top of Digital Credit. And Digital Yield refers to something that concentrates and amplifies the yield of Digital Credit. Both Digital Money and Digital Yield are L3, since they exist on top of L2 Digital Credit. 

Now that we know Digital Money and Digital Yield, we will move on to the different architectures for them. 

Debt based tranching

The first and primary one is a debt-based tranching structure in which the digital credit is used as the base collateral asset. The junior tranche is effectively leveraged long digital credit, and the senior tranche is effectively principal protected via the junior tranche’s permanent capital. Right now this is by far the most common structure because we see quite a lot of AUM inside these types of systems. For example, Saturn is a tokenized protocol that holds a lot of STRC, and the financial engineering built on top of Saturn is Strata, which uses the same tranching approach (the name “Strata” likely refers to stratifying the different financial layers within the setup). 

Another very important example is UTXO Management’s Preferred Income Strategies LP. This is a dual-class fund: a junior fund share class and a senior fund share class. The juniors are effectively leveraged long the underlying digital credit portfolio and the seniors receive a highly principal-protected 7.5% annual yield. Now, the caveat is the portfolio value cannot fall below the invested capital representing the senior’s original principal. Seniors must get all their principal back before the juniors can get paid. UTXO is able to run some other alpha-generating strategies which may reduce downside risk of the digital credit portfolio or employ relative value trades to capture market mismatches. Such actions increase the returns of the total portfolio. And since the juniors are leveraged long this portfolio, they have the potential to outperform. Meanwhile, the seniors have the entire principal protection cushion. Tranching using the two share classes therefore matches different parties’ risk preferences and desires for total return in a way that services both investor profiles.

You might notice that this basic structure is quite similar to what a digital credit issuer like Strategy or Strive does with their own capital structure. If the issuer raises capital using preferred equity or debt, they have created a more senior layer—that becomes the principal protected layer, albeit it is asset value coverage rather than encumbered, callable protection—while the common equity becomes the junior tranche that is effectively leveraged beyond the underlying asset. In other words, the digital yield and digital money products built on top of digital credit using this tranching structure is a higher order retelling of the same digital credit and digital capital maneuvering done one layer below.

Now, it’s important to realize that any kind of leveraged system that borrows money and then invests the borrowed money into digital credit, is effectively engaging in the Layer 3 methodology of tranching, because that person is now leveraged long, and his counterparty is another person who becomes principal protected. Outside of raw asset coverage ratios, the specific degree of principal protection depends on whether the collateral asset—in this case the digital credit instrument—is sitting in some kind of custody that can be enforced. 

Put differently, should the digital credit position go underwater, the creditor is able to possess the assets, liquidate the collateral, and be made whole. Enforceability depends on the exact parameters of these structures. Within the case of something like Strata, it is enforced by a blockchain consensus dependent smart contract. The successful execution of that smart contract is where the trust resides. Within the UTXO Preferred Income Fund, you have an enforceable structure within the confines of a regulated hedge fund that all LPs partake in.

One key insight is that such a debt-based structure is far broader and more general than one might initially suspect. Let’s say somebody takes out a mortgage against their house and buys digital credit with it. They have somewhat created that L3 concept because money is being created via the traditional fractional reserve banking process, and collateral has been encumbered. Now, in this case, digital credit isn’t exactly the collateral because the house is the collateral. However, the entire economic setup would not be possible without the presence of digital credit serving as an investable asset and a location to deploy borrowed capital. In a sense, there is a bit of a shadow banking condition that emerges if a widespread group of people take out loans of various forms that might be secured by other assets or even unsecured, and then use the borrowed capital to invest in digital credit in order to be leveraged long digital credit.

The assets that emerge out of this type of behavior is basically conventional credit. It is not tokenized, and there is nothing special about it. It takes the form of an asset-backed security, and frankly, you wouldn’t even know that digital credit was on the other side of it most of the time. And for this reason, it’s not completely precise to call it the L3 digital yield concept, because it does not deal directly with digital credit. At the same time, it is a meaningful market mechanism which may emerge, and we should actively monitor the emergence of this behavior as digital credit scales.

Now I will go into the potential problems and current shortfalls of this type of debt-based, tranching method. The most obvious one is that there is no backstop besides the debtors’ own balance sheets and there is a constant need for debtors to take the leveraged long side for this to work. This is a persistent issue that caps the scalability of L3 digital money and digital yield solutions. If it is the case that you always need a leveraged long party in order to create the principal protection for the senior tranche, then you become constrained by the availability of leveraged long parties. First, there may be much better things to be leveraged long, so you might not have junior capital if there are more compelling opportunities out there. Second, there is always a push-pull relationship between the seniors and the juniors. Because the entire thing exists within a tranche structure, the total portfolio is a zero-sum game. Whatever the seniors gain, the juniors must lose, and vice versa. And because of this, the seniors can only demand yield up to a certain level before the juniors leave. Concurrently, the juniors must receive a return at least to a certain level before they would be willing to take the risk. This relationship needs to reach an equilibrium clearing price. But even at that clearing price, it is doubtful that there will be enough demand for leveraged long digital credit to persistently create the senior principal protected position. 

This exact challenge is supported by the anecdotes of the tranching structures I am aware of: there appears to be a relative shortage of folks willing to be juniors and a relative surplus of folks willing to be seniors. 

Now, the way the fiat system solves this problem actually presents a very interesting case study for L3’s current shortcomings. You see, fiat solves this problem by having an elastic public balance sheet behind the private credit system. Commercial banks can create credit and deposit money, while the central bank supplies the ultimate settlement asset (which is often called: M0, base money, or bank reserves). When systemwide deleveraging threatens the monetary system, the central bank can create reserves and replace disappearing private liquidity, while the Treasury, deposit insurer, or other public institutions can absorb or redistribute credit losses where policymakers choose to do so. This means the fiat system does not require a private actor to remain willing to be the marginal leveraged long investor during a panic: the public sector can temporarily take that role and prevent forced deleveraging. Thus fiat money can remain present even when the leverage behind it disappears. (Digital Money implemented via the tranching architecture cannot do this.)  

Equity and creditors can still be wiped out in fiat. But the distinctive feature of fiat is that there is no hard nominal constraint on the public sector’s ability to manufacture the settlement asset needed to stabilize the financial system. The ultimate macroeconomic constraint on sustained use of that capacity is the availability of real resources and the ability for individuals to tolerate the inflationary impact of such currency debasement. This is the true limit of fiat’s debt-based system at a societal level; and indeed this is also the core conclusion of Modern Monetary Theory.

Now, it should be easy to see that digital credit does not have this type of backing today. It is doubtful that any central bank today would consider buying digital credit when it is underwater to make investors whole (even though central banks do this often with traditional forms of credit like mortgages and other bank loans). And so in that sense, the concept of a fiat-banking-like system that is constructed on top of digital credit to serve as widespread L3 digital money is dubious at best within the next few years. Certain things need to happen—the main one being better Basel risk weights for Bitcoin—and even then meaningful progress would likely be quite slow.

Lacking the support of the commercial banking system or the central banking system, the only capital that can come in as the leveraged Digital Yield juniors to support the creation of the Digital Money seniors is private capital willing to take the risk. 

Full reserve, spendable balance 

This now brings us to the second form of L3 digital money. These are full-reserve, spendable balances. (A quick disclaimer here is that just because this one is “full reserve” does not imply that the tranching structure is “fractional reserve”. Full reserve just means that the available spendable balance is fully supported by unencumbered shares held on the spot.) 

This concept is to combine digital credit with a basket of other credit instruments to create a composite benchmark that is both highly liquid and yields over the risk-free rate (here the risk-free rate just means the short-term U.S. T-bill rate). And if this asset also had daily liquidity and could accrue interest on a daily basis, then you have what is like a money market fund with added risk premium and volatility. If this thing could then be tokenized or turned into a spendable balance, then you now have what could be considered a digital currency that pays higher yield. Note that the composite benchmark is not required: one could have only digital credit in the balance and make it spendable too. Since the volatility of digital credit is higher than short duration credit instruments like FLOT or FLTR (floating rate note ETFs) or JAAA or CLOA (AAA-rated CLO tranches), purely digital credit will be a more volatile albeit higher yielding spendable balance. 

The real hurdle for this concept is regulatory acceptance. Consider the recent plight over stablecoins and the Clarity Act, and how banks rejected Clarity because stablecoins serve as a big competitor to them. One of the most contentious issues was stablecoins paying yield, which would compete with traditional bank deposits. Now if we had a spendable balance with relatively stable par value that pays a higher-than-risk-free yield due to a credit risk premium, then this would probably create even more of an issue. In that sense, the idea of using relatively-stable-value securities (of which digital credit is just one group) as spendable balances is something that is sensitive when considering the different parties that need to be satisfied for this to become legally possible.

A softer version of the spendable balance concept is something like Castle: businesses can hold reserves in STRC, liquidate STRC into cash on demand, and then use that cash for operating expenses. The conversion follows normal securities T+1 settlement. This is like a brokerage account connected to a payment provider. Neither the shares nor representation of the shares (like a token) are being transferred to the final recipient of the payment. 

Of course, there are far less obstacles to creating a simple fund that holds digital credit without making the fund interests peer-to-peer transferable. OranjeBTC has done exactly this with their Digital Credit ETF launched in Brazil. In this specific case, OranjeBTC has even employed a currency hedge procedure to deliver yields denominated in Brazilian Real. Even though this return stream can probably be replicated without much difficulty, it is nevertheless far more convenient for most people to buy a single ticker that takes care of everything. 

Conclusion 

The existing developments and current regulatory parameters suggest that the debt-based tranching solution will likely be more of the activity within the L3 field. There are several different variations of both archetypes: within this article we’ve gone through a few different versions. 

I aim to explore such models—existing and theoretical—in greater depth in the future. Stay tuned.

Disclaimer: This content was prepared on behalf of Bitcoin For Corporations for informational purposes only. It reflects the author’s own analysis and opinion and should not be relied upon as investment advice. Nothing in this article constitutes an offer, invitation, or solicitation to purchase, sell, or subscribe for any security or financial product.

This post Understanding Digital Money and Digital Yield first appeared on Bitcoin Magazine and is written by Allard Peng.

Bitcoin Magazine

Impacts of Daily Dividends on Digital Credit

In May 2026, Strive rebranded itself as “The Daily Dividend Company,” then moved SATA to daily cash dividends beginning June 16. Strategy has now pushed the same idea into its own digital credit engine. On September 24, its board proposed moving STRC, STRF, STRK and STRD to daily dividends, subject to shareholder approval at an October 28 special meeting. The proposal keeps the annual dividend economics unchanged and changes the cadence of cash payments.

STRC spent much of the summer below its $100 stated amount even as Strategy raised its dividend rate to 12% and deployed more than $1 billion buying back STRC. The move to daily dividends by Strategy could be seen as the latest attempt to make the security more attractive and help it trade near par.

Now that the overton window has fully shifted in favor of digital credit paying daily dividends, we should take a look at the actual impacts of daily dividends. 

Daily Dividends Fit Onchain Finance

Digital credit is increasingly becoming an input for other financial products—so called “digital money” or “digital yield” products. Strategy estimated in mid-May that more than $440 million of STRC exposure had moved into DeFi through stablecoins, tokenized securities, yield products and other structures.

However, there is a cash flow mismatch. Crypto products commonly accrue and distribute yield at high frequency. A security that pays monthly or twice monthly forces the product sitting on top of it to bridge the period between economic accrual and actual cash receipt.

Daily dividends compress that gap to one day. The protocol, fund or issuer receives cash from the underlying asset at almost the same cadence that users expect to receive yield. That simplifies liquidity management and reduces the cash needed between dividend dates. This is much more impactful to a financial product funding daily distributions or redemptions than to a long term investor focused on total return. The crypto-heavy setting of the “Layer 3” products on top of digital credit raises the attractiveness of daily dividends. 

Daily Dividends Are Primarily a Retail Feature

For investors focused strictly on total return, dividend payment frequency makes little difference in underlying economic value. The asset’s price accrues between distribution dates and adjusts post-payment, meaning annual, quarterly, monthly, and daily payouts produce comparable long-term results.

The true advantage of daily dividends lies in product psychology and user experience. Cash arriving every day provides immediate visibility and an engaging feedback loop. Investors can spend, withdraw, or automatically reinvest the payout while leaving their principal position intact, turning an abstract yield metric into tangible recurring cash flow.

This dynamic mirrors the strategy of Realty Income, which built a massive retail follower base by branding itself as “The Monthly Dividend Company.” As a member of the S&P 500 Dividend Aristocrats Index, Realty Income has paid and raised dividends for 31 consecutive years. 

Daily dividends on digital credit extends this product concept even further: SATA pairs frequent daily payouts with a target price near $100 and a double-digit yield.

While institutional investors prioritize yield spreads, liquidity, tax structure, and balance sheet coverage, daily payments offer their strongest appeal to retail buyers. If the overarching objective is to raise capital to purchase Bitcoin, optimizing security design for retail investor preferences is the most effective approach.

Options Get Cleaner Too

Daily dividends also change options mechanics. STRC currently pays $0.50 twice monthly. SATA pays roughly five cents each business day. Larger dividend events create larger discrete adjustments in the underlying price, which affects option pricing and early exercise decisions. Daily payments spread the same annual cash flow across much smaller adjustments.

The total value of dividends over an option’s life is a key economic input. The more interesting effect comes from the price stability created by daily dividends. If daily dividends, variable rates and active par management keep SATA and STRC trading in narrower ranges, realized volatility should fall. Implied volatility can follow as the market gains confidence in that behavior.

The Biggest Test

The real test is whether daily dividends increase demand enough to eventually lower the required yield.

If investors consistently support SATA near the top of its target range, Strive can theoretically reduce the dividend rate while attempting to keep SATA near par. Success would show that a Bitcoin company can issue permanent preferred capital, manage it around a stable price, and adjust its yield with market demand. The benefit of the variable rate preferreds was, from inception, the eventual opportunity to lower the rate and reduce the cost of capital without upsetting price stability. In comparison, fixed rate credit locks in fixed rate forever. 

Conclusion 

Strategy adopting daily dividends would move the feature from a SATA differentiator toward a digital credit category standard. The annual economics barely change but the retail appeal and crypto composability become meaningful improvements. 

This post Impacts of Daily Dividends on Digital Credit first appeared on Bitcoin Magazine and is written by Allard Peng.