"ETH Strategy" (announced holding 12,342 $ETH, approximately 46.5 million USD.

The design inspiration for the ETH Strategy comes from the Strategy that uses convertible bond financing to purchase $BTC.

But the ETH Strategy is implemented on the #DeFi# chain, which does not require centralized institutions and also avoids the interest cost of traditional debt.

The agreement uses options embedded in the debt to obtain capital in the form of zero interest, equivalent to "zero-cost borrowing."

In simple terms, the ETH Strategy is a DeFi-native autonomous Ethereum treasury protocol (on-chain treasury protocol).

The core gameplay is to continuously increase the holding amount of ETH through the Convertible Debt and At-The-Market (ATM) issuance mechanism.

Convertible Debt

The protocol issues convertible bonds, exchanging stablecoins for bonds. The protocol uses these funds to purchase ETH to include in the treasury, thereby increasing the value of ETH corresponding to each STRAT (EPS, or ETH per STRAT).

Users purchase bonds with USD stablecoins, obtaining CDT (debt tokens) + NFTOption.

Buy ETH with USD immediately and enter the vault.

Bondholders can convert CDT+NFT to STRAT during the redemption period; if deferred, the USD value will be redeemed.

Users holding CDT can exchange CDT for STRAT, which means the protocol destroys debt and releases STRAT to holders, reducing the debt burden and optimizing the leverage structure.

At-The-Market (ATM) issuance

In ATM mode, the protocol pre-mints STRAT and invests it into the STRAT/ETH LP pool, then sells it on the market in exchange for ETH.

The protocol plans to deposit some ETH into lending pools such as Morpho, allowing STRAT users to use STRAT as collateral to borrow ETH, while the protocol earns interest, achieving additional treasury income. This also guards against governance attacks and enhances the intrinsic value of STRAT.

If the ETH obtained from selling STRAT is higher than the net asset value (mNAV) of STRAT, the protocol will repurchase STRAT through a unilateral "buy tax" method, thereby obtaining >1 times the ETH and promoting EPS growth.

The three types of protocol tokens involved in the ETH Strategy

$STRAT (ERC-20): Represents protocol equity, holders share in EPS growth.

$CDT (ERC-20): Debt token, corresponding to protocol debt

NFT Option (ERC‑721): Convertible bonds with embedded conversion terms that can be exchanged for STRAT or USD before or after maturity.

Convertible Debt (CDT)

Bond term: approximately 4.2 years of long-term debt.

Purchase method: Users buy CDT (Debt Token) + NFT Option with stablecoins.

Conversion Rights: Holders may convert CDT + NFT to STRAT during the redemption period; if the option period is exceeded, they can redeem for USD value.

Interest Rate: Essentially no direct interest, but it includes issuing covered call options to earn premium as income.

STRAT pricing mechanism and At-The-Market (ATM) sales

Issuance Strategy: Pre-mint STRAT via the protocol and inject into the STRAT/ETH liquidity pool, selling STRAT on the market at the current market price (ATM sale).

Premium purchase of ETH: When the selling price of STRAT is higher than its net asset/value (mNAV), the protocol repurchases STRAT unilaterally through a "buy tax," equivalent to buying more than 1 ETH with 1 STRAT, thereby driving up EPS.