Bond Series Lifecycle

Every bond series follows the same five-phase lifecycle from creation to settlement.

Phase 1: Setup

The protocol publishes series terms on-chain. Once published, terms are immutable.

Published parameters include:

• Face value and maturity date

• Minimum and maximum sale size

• Pricing method and issuance caps

• Settlement rules and waterfall

• (USD series) Backstop pool parameters

For USD series: The USDT Backstop Pool is created and staking opens. Stakers deposit USDT and receive pool shares representing their proportional claim.

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Phase 2: Sizing

The final sale size is determined before the sale opens.

BTC Series

Sale size is defined by:

• Series caps set in the terms

• Investor subscription demand

USD Series

Sale size is determined by staked USDT:

• Minimum: Sale only proceeds if staked USDT supports at least the minimum size

• Maximum: Sale is capped regardless of demand

• Final size: Limited by available staked USDT, up to the cap

If staked USDT is insufficient to meet the minimum, the sale does not proceed and stakers can withdraw.

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Phase 3: Sale

Investors subscribe into the series.

Process:

1. Investor sends subscription currency (BTC or USDT)

2. Protocol issues Note NFT (principal claim)

3. Protocol issues Warrant NFT (tradable upside)

4. Subscription proceeds are routed per series policy

For USD series: If not all bonds are sold (sale is under-filled), stakers can withdraw surplus USDT pro-rata. Only the portion required to backstop the final sold amount remains locked.

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Phase 4: Tenor

The period between sale completion and maturity. During tenor:

Warrant Activity

• Warrants trade on the secondary market

• Warrant holders may exercise by paying USDT par

• Exercise proceeds flow into the series ledger

• (USD series) Each exercise reduces required backstop lock

Backstop Withdrawals (USD Series Only)

USDT stakers may withdraw to the extent their stake is no longer required. This happens as:

• Warrant exercises add USDT to the series ledger

• Note redemptions or conversions reduce outstanding principal

Important: Withdrawals are always pro-rata across all stakers. Every staker retains the same proportional entitlement to:

• Warrant airdrops (if applicable)

• Maturity compensation (reserved $MSTR and BTC make-whole)

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Phase 5: Maturity & Settlement

At maturity, the series settles all obligations.

Note Repayment

The protocol repays Note NFTs according to the series settlement waterfall:

1. Series ledger funds (warrant proceeds, buffers)

2. (USD series) USDT Backstop Pool

3. Treasury funds (if policy permits)

Staker Compensation (USD Series)

After Note repayment, USDT stakers receive their compensation:

1. Reserved $MSTR — Pre-minted at sale completion using TWAP, distributed pro-rata

2. BTC make-whole — If $MSTR value at maturity is less than USDT taken from stakers, BTC covers the difference pro-rata

Reconciliation

All settlements, rewards, and final balances are published on-chain. The series is closed.

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Lifecycle Summary

┌─────────────────────────────────────────────────────────────────┐
│  SETUP        │  SIZING       │  SALE         │  TENOR         │  MATURITY     │
├───────────────┼───────────────┼───────────────┼────────────────┼───────────────┤
│ Terms         │ Determine     │ Issue         │ Warrants       │ Repay Notes   │
│ published     │ final size    │ Note +        │ trade &        │               │
│               │               │ Warrant NFTs  │ exercise       │ Compensate    │
│ (USD) Pool    │ (USD) Check   │               │                │ stakers       │
│ created       │ min/max       │ (USD) Surplus │ (USD) Pro-rata │               │
│               │               │ withdrawable  │ withdrawals    │ Publish       │
│               │               │               │                │ settlement    │
└───────────────┴───────────────┴───────────────┴────────────────┴───────────────