Low-Risk USDT Asterategy Bonds

Upside + More Upside

A Proven Model

Michael Saylor of MicroStrategy has proven the utility of convertible bonds to offer his treasury company fresh cash to deploy, while offering risk-averse investors exposure to potential explosive upside in his company's common equity, $MSTR.

These convertible bonds are repayable in cash after some fixed number of years, but if $MSTR trades above their embedded call option's strike price, they turn into $MSTR shares.

While other digital asset treasury companies may be simple buckets of tokens with few mechanics for raising more capital outside of at-the-money offerings, Asterategy uses Aster's own ALP (Aster Liquidity Pool) to put the bonded capital to work earning healthy yield while it waits for the maturation period to conclude and determine if that cash will end up in the Asterategy treasury or back in the hands of the bond initiator.

This offers truly free upside for someone who wants to hold stablecoins but be exposed to massive upside in $ASTRT token (which is itself linked to the price of $ASTER token).

Current Configuration

Currently, $ASTRT bonds sit at a fixed 30% upside and a 90 day maturity period. Management or a governance vote could modify those parameters. 90 days offers sufficient time for ALP to deliver real yield to the protocol and for the market to properly price the $ASTER to $ASTRT ratio.

Benefit for $ASTRT holders

While convertible bonds are occasionally derided for being dilutive towards current tokenholders, with the Asterategy bonds, should $ASTRT trade below a 1.0 mNAV, the yield from ALP can be used to buy back and burn $ASTRT rather than accrue new $ASTER, thus providing buyback power to support a healthy and balanced market.

Step-By-Step

• Step 1: Navigate to app.asterategy.com and connect your EVM-compatible wallet. Metamask and Rabby are two of the more popular ones.

• Step 2: Ensure you are connected to BNB Chain (also called Binance Smart Chain), with sufficient BNB for gas and USDT to initiate the bond.

• Step 3: Type in the amount of USDT you'd like to bond and click "Initiate Bond".

• Step 4: Confirm in your wallet.

• Step 5: Observe your bond as it matures over 90 days, keeps track of the strike price of your convertible bond, and tells you precisely how many $ASTRT you would mint if it trades above the strike price.

• Step 6: At the end of 90 days, come back to app.asterategy.com. If $ASTRT trades above the strike price, click "Mature Bond" and get the fixed quantity of $ASTRT. If it trades below the strike price, you automatically get back your USDT.

Your Risk

If ALP or Aster DEX itself suffers a major exploit or hack, it could adversely impact the bonded USDT in ALP. If ALP suffers an unforeseen loss due to price manipulation or poor market-making, it could result in a haircut for bondholders. If the Asterategy smart contract itself suffers a hack or exploit, it could also adversely affect the bonded USDT.

TL;DR:

You deposit USDT. Asterategy puts it in ALP for 90 days. At the end of 90 days, if $ASTRT trades more than 30% higher than it did on the day you bonded, you get $ASTRT and capture the upside above that 30%. And Asterategy buys $ASTER at that time and stakes it. If it doesn't trade higher, at the end of 60 days, you claim and get your USDT back. And Asterategy uses the ALP yield to either buy more $ASTER, or buyback and burn $ASTRT.