Convertible Notes
What are Convertible Notes?
Convertible notes represent a hybrid financing instrument central to SolStrategy's capital expansion model. These notes, similar to their traditional finance counterparts, combine debt and equity characteristics through two distinct but complementary components:
Debt Component (CNT): A fungible token representing the principal amount owed by the protocol
Equity Conversion Right (NFT Contract): A tokenized contract granting the right to convert debt into SSTR.
Unlike traditional convertible bonds, SolStrategy's implementation separates these components into distinct tokens, enabling sophisticated risk management and trading strategies not possible in traditional finance.
Convertible Note Structure
When an investor purchases a convertible note from SolStrategy:
They deposit USDC, SOL, or a LST into the protocol treasury
They receive CNT tokens equal to the value of their deposit
They also receive an NFT contract representing their conversion rights
Conversion (or Redemption)
According to the price of SSTR and the time passed, the user may choose to redeem their NFT contract for the vested SSTR. This burns the corresponding amount of CNT and gives the user the vested amount of SSTR.
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