Risks for Bond Investors
Every investment has risks. Here's what you should understand before buying a bond.
Note NFT Risks
Your principal claim is protected, but not guaranteed.
Smart contract risk
Bugs or exploits in protocol code
Low but non-zero
Oracle failure
Price feeds malfunction during settlement
Low — multiple safeguards
USD Bond: Extreme shortfall
Insurance Pool can't fully cover gap
Very low — requires severe conditions
Protocol failure
Catastrophic event affecting the entire protocol
Very low
BTC Bonds: Your principal is held in BTC and returned in BTC. No conversion risk.
USD Bonds: Your principal goes through BTC → USDT conversion at maturity. Protected by series proceeds + Insurance Pool.
Warrant NFT Risks
Warrants have upside potential but can also be worth nothing.
Expires worthless
$MSTR price stays below strike — Warrant has no value
$MSTR price decline
Token price drops, reducing or eliminating Warrant value
Missed expiry
Forget to exercise before expiry — Warrant becomes worthless
Liquidity risk
May be hard to sell Warrant at fair price on secondary market
Key point: You can lose 100% of your Warrant value. This is the "option" part of the bond — high potential upside, but no guarantee.
Market Risks
BTC price volatility
Affects treasury value and $MSTR price
$MSTR price volatility
Directly impacts Warrant value
Secondary market liquidity
May be difficult to sell Notes or Warrants quickly
What's NOT a Risk
"What if BTC crashes before maturity?"
BTC Bonds: You still get same BTC back. USD Bonds: Insurance Pool provides backup.
"What if I can't exercise my Warrant?"
You can sell it instead. Or let it expire if it's worthless anyway.
"What if the protocol changes the terms?"
Terms are immutable once published. Cannot be changed.
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