Ondo Finance, an institutional-grade on-chain finance platform has announced the launch of Strategy’s yield-bearing tokenized STRC stock. The tokenized asset is backed by Strategy’s Bitcoin treasury, and will pay a yield of 11.5 percent annualized.
Tokenized STRC goes live, but experts raise concerns
The tokenized form of STRC tracks Strategy’s Stretch perpetual preferred share that gives dividends monthly. Notably, the on-chain asset has gone live on leading smart contract protocols, such as Ethereum, BNB Chain, and Solana.
Importantly, the tokenized STRC will give non US-based citizens on-chain access to the Nasdaq-listed stock. While this development offers yet another example of the tokenization of assets through blockchain technology, the overall reaction to STRC going on-chain is mixed.
For example, some industry experts raised concerns pertaining to tokenized STRC’s liquidity, net dividend yields, the possibility of on-chain attack vectors being exploited, and the unclear mechanism of Ondo Finance disbursing dividends.
In addition, there is some discussion regarding the exact yield rate. While Strategy offers a rate of 11.5 percent, Ondo Finance is showing an underlying asset dividend yield of only 8.03 percent on tokenized STRC.
According to Ondo Finance’s fees and tax documents, the yield differential arises from withholding tax rules. To explain, Ondo Finance is based in the British Virgin Islands, and faces 30 percent US withholding tax on dividends received from a US-based firm.
STRC’s core issues remain
In response to Ondo Finance’s X post, ParaFi Capital investor and portfolio manager, Kevin Yedid-Botton stated that while impressive, tokenization still does not solve the multiple core issues of the STRC stock.
Detailing, he said that STRC’s liquidity on Nasdaq is already thin, and Strategy is actively raising the dividend to defend the $100 par. By tokenizing STRC, the underlying asset’s net yield, and smart contract-associated risks amplify. It also fragments the stock’s already thin float.
According to data from Yahoo! Finance, STRC is trading at $99.98 at press time (19:27 GST). The stock is up 6.65 percent over the past year, but has remained flat over the past month, showing a modest decline of 0.03 percent.
Strategy’s Bitcoin stack currently stands at around 818,334 BTC, valued at more than $61.8 billion at current market prices. However, the firm chose to not buy any fresh BTC last week.
