How Does SURGE Work?

LeoStrategy is a permanent-capital vehicle that is designed with one simple mission: add LEO to our balance sheet and permanently stake it as sLEO.

We are approaching 2M LEO in holdings or $530,000+ in USD terms. Every day, we're acquiring LEO through both our revenue-generating projects like @lstr.voter, market makers and also our initial sale of SURGE.

Our SURGE initial sale capital raise is used to purchase LEO and add it to our balance sheet.

What is SURGE?

SURGE is a volatility hedge. In short:

1. Maintains a $1 floor price via liquidation preference - the floor price of SURGE is $1
2. Pays a 16.67% effective yield if purchased at the initial sale (the yield drops to ~15% after the initial sale by way of market pricing)
3. Can be converted 50:1 to LSTR tokens

Effectively, SURGE is meant as a way to lock in profits that you may have experienced from other cryptos. A lot of us hold crypto like ETH, BTC or LEO which have risen multiple hundreds of % lately.

By buying SURGE with some of your profits, you are protecting your profits.

SURGE is protected to the downside because it has a $1 floor price. That being said, it has theoretically unlimited upside because it can be converted into LSTR shares at a 50:1 ratio. 50 SURGE for 1 LSTR.

This means that when LSTR passes $50 in price, 1 SURGE will start to rise over $1 in value. For example, when LSTR trades at $100, SURGE will predictably trade at at least $2. Why? Because it can be instantly converted from SURGE to LSTR tokens at the same 50:1 ratio.

So if you buy 50 SURGE today for $0.90 (our initial sale price), you spent $45 to buy those 50 SURGE tokens.

When LSTR trades for $100, you can then convert the 50 SURGE to 1 LSTR. This means your $45 is now worth $100 in LSTR. You can then sell or HODL the LSTR and lock in a profit of $55.

Alternatively, you can sit on your SURGE and keep earning the 16.67% yield that it pays. SURGE tokens in the open market will rise in value because others will try to buy your SURGE for the conversion value ($2 per SURGE at a $100 LSTR price).

Unlimited Upside and Mitigated Downside

SURGE has a $1 floor price which mitigates all of the downside.

The conversion option to convert 50 SURGE to 1 LSTR gives you upside in the future of the LEO Token Economy.

So you get the best of both worlds:

1. Limited downside exposure (you know for a fact that your 1 SURGE can later be liquidated to $1)
2. Unlimited upside exposure (if/when LSTR rises beyond $50, your conversion option is "in-the-money" which means you can convert 50 SURGE to 1 LSTR and make a profit)

While you wait for LSTR to go beyond $50, you earn a 16.67% yield that is paid out weekly in either HBD or LSTR tokens.

How is Any of This Possible?

Does this sound too good to be true? Limited downside and theoretically unlimited upside?

The reason why this is possible is because LSTR is taking the other side of the trade. You are locking in profits from BTC, ETH, LEO or other coins in your wallet that have risen in value.

Meanwhile, LeoStrategy is giving you an option to purchase LSTR for $50 per share in the future. That option we're giving you is worth a minimum of $1 at all times (because of the floor price) and that option also pays you a 16.67% dividend every week while you wait for it to be in-the-money.

LeoStrategy takes the other side of the trade: we assume the risk of using that capital to purchase more LEO and add it to our balance sheet.

Effectively, while you are de-risking and hedging with SURGE, we are adding risk and buying more LEO.

LEO Holders

If you are a LEO holder, this should make a lot of sense to you. Not only are you de-risking and hedging with SURGE, you are also effectively pushing the LEO Price higher both now and in the future. Why? Because the SURGE capital we get is used to buy more LEO and permanently remove it from the market (since LeoStrategy purchases LEO off the market, stakes it as sLEO and never unstakes/sells it).

Our goal is to acquire a minimum of 10M LEO by the end of 2025. We will do this through various means. One of which was the initial sale of LSTR. The second major way is the initial sale of SURGE.

The other ways are through accretive revenue-generating products like @lstr.voter, market makers, staking sLEO on LeoDex to earn USDC, etc.

As we add more LEO to our balance sheet, more LEO is removed from the potential of being sold (almost like burning but without removing the tokens from the supply - they are instead perma-staked as sLEO on our balance sheet).

ELI5 SURGE

For fun, we put this post through AI. We know that the economics of SURGE can be a bit complex. We tried to explain it as well and succinctly in this post as possible. Let's see what AI has to say if we ELI5 it:

Posted Using INLEO