In this episode of Unchained, host Laura Shin sits down with Matt Cole, the Chairman and CEO of Strive, the seventh-largest Bitcoin treasury company in the world. The conversation centers on the recent volatility in the digital credit market, specifically focusing on the performance and mechanics of Bitcoin-backed perpetual preferred stocks like Strive's SADA and MicroStrategy's STRC. Cole explains the strategic rationale behind these high-yield instruments, addressing market concerns over recent price depegs, leverage liquidation events, and corporate decision-making.

Cole also defends the role of large corporate accumulators in the Bitcoin ecosystem, arguing that institutional wrappers provide critical access for traditional investors who cannot hold spot assets directly. Throughout the discussion, Cole references the systemic benefits of corporate treasuries, explaining how they contribute to the network's overall resilience, aligning with the principles of Nassim Nicholas Taleb's Antifragile Things That Gain from Disorder. The episode provides a deep dive into structured finance, liquidity management, and the cultural tension between self-custody and institutional adoption.

The Mechanics and Risk Management of Digital Credit

SADA's yield was raised from 12% to 13% to reflect widening credit spreads in the depths of a Bitcoin bear market, which Cole notes is expected during cyclical downturns.

"We started with a 12-month reserve. We currently have an 18-month reserve, and 18 months is not a random number. It's actually a very intentional number" - Matt, representing the longest historical Bitcoin bear market.

SADA's governing documents cap the maximum interest rate at 20%, which Cole believes is highly underwriteable given an estimated 30% CAGR for Bitcoin over the next 10 to 15 years.

Analyzing the Recent Liquidation Events in STRC and SADA

Cole attributes the sharp drop of STRC to $82.50 to a leverage liquidation event, noting that retail leverage in crypto historically ends poorly.

"What you saw with SADA was a pretty consistent volume profile Monday through Thursday" - Matt, indicating no evidence of forced liquidations for Strive's product.

SADA's temporary drop to the low $90s was driven by opportunistic investors selling SADA to buy the heavily discounted STRC.

Corporate Treasury Strategies and Capital Allocation

Strive invested $50 million of its corporate treasury into MicroStrategy's STRC, viewing it as a medium-duration asset that represents less than 25% of Strive's cash and marketable securities.

MicroStrategy's decision to sell 32 Bitcoin and adjust its language to being "net buyers" represents a pragmatic response to S&P's rating methodology, which gives zero credit to Bitcoin holdings.

MicroStrategy successfully raised $335 million by offering 2.7 million common shares, demonstrating that equity markets remain open and highly liquid.

Systemic Impacts of Institutional Bitcoin Wrappers

Cole addresses criticisms from figures like Jack Mallers, stating that while self-custody is ideal, institutional wrappers bring Bitcoin exposure to massive equity-mandated funds like Fidelity and Capital Group.

Drawing from the framework of Antifragile Things That Gain from Disorder, Cole argues that large corporate treasuries make the Bitcoin ecosystem more robust rather than posing an existential risk.

"Someone that owns less than 4% of an asset is not even required by the SEC to report it" - Matt, putting MicroStrategy's ownership share into perspective relative to US corporate standards.