I'm buying SURGE at $0.75. The discount + effective yield are incredibly enticing and I love getting paid while I wait to be right.
ICYMI, SURGE sold out last Sunday and then went live for open trading a few days ago. SURGE now has a Base version and a HE version. You can cross-chains using the 
LeoStrategy has already setup cross-chain market makers that efficiently close market arbitrage windows and generate profits for the fund. According to LeoStrategy, over $300 in profits was generated in the last 24 hours which = $108,000+ in profits per year. These profits are used to buy more LEO and expand their balance sheet which scales existing products + makes room for new products.
With SURGE going live at $1 per SURGE and subsequently dipping to where it is now ($0.75 per SURGE), I feel like it's a good time to write this post and tell you what I'm doing.
SURGE is a math-driven asset. It has a $1 floor price, a stated yield of $0.15 per SURGE token per year and a conversion right to LSTR shares at 50:1 (50 SURGE to 1 LSTR).
SURGE has a $1 minimum value but that does not mean the market will always price it as such. Especially in these early days, we will see volatility around this $1 floor price. This is very normal -- especially since the average SURGE presale buyer bought in at $0.72.
With the rest of the crypto market crashing, SURGE has been dragged down to $0.75. What I am seeing is early presale buyers bought in at ~$0.72 and are selling it for a slight profit (or breakeven in some cases) and using the proceeds to buy their favorite altcoins that are dipping 20% today.
This isn't a bad thing; it's just the market. One thing I've learned from being in the markets for half of my life has been that the market will do what the market wants to do. Fighting it is a great way to lose money.
Instead of fighting it, I look for ways to find mispricing. Inside mispricing, you'll find opportunity.
SURGE is Mispriced: It's Just Math
SURGE is trading below its $1 floor price. From my perspective, this means that the market is giving us an opportunity to take advantage of presale exiters and get paid to wait while SURGE re-prices itself to $1.
Let's see if the math lines up:
- SURGE has a $0.15 fixed yield per 1 SURGE token. This means that the lower the price of SURGE is, the higher the effective yield is (since you're paying less for the same yield)
- SURGE has a $1 floor price as stated by the liquidation preference. This means that your worst case scenario is LeoStrategy goes out of business and you get paid $1 for each SURGE you hold since SURGE holders are at the top of the capital stack and get paid out first in the event of a liquidation
- SURGE's mechanics act like a rubber band: the lower the price goes, the higher the effective yield + profit to re-peg. This means that downward price momentum actually creates upward demand momentum
For each $0.05 that SURGE drops, the effective yield and potential upside for SURGE regaining its peg increase.
I am buying SURGE at $0.75 (where it is right now), because I get 20% effective yield and 33.33% profit when it eventually re-pegs.
The profit to re-pegging is a virtual *guarantee because of the liquidation preference. If the market won't pay you $1 per SURGE, then LeoStrategy will pay it to you either by dissolving the fund (unlikely) or via the conversion to LSTR.
This means that there are...
3 Ways to Get $1 For Each SURGE You Hold (33.33% Instant Upside)
There are 3 ways to get $1 for each SURGE you buy at $0.75:
- Market Re-Peg: Buy at a discount → profit on re-peg.
- Liquidation Preference: Even in worst case, holders get priority payout.
- LSTR Conversion: 50:1 conversion = embedded call option when LSTR hits $50.
My bet is that market irrationality does not last long. The early presale buyers are seeing their altcoin bags dip 30% this week in most cases and they see go digging in their pockets to see what loose change they have.
They then see that SURGE is actually profitable this week for them (because they bought it from LeoStrategy at $0.72 per SURGE and can sell it for $0.75 per SURGE). They then sell their SURGE and buy whatever altcoin they love and hope for it to go up 30% so they can regain some of what they lost.
This is not a bad thing. It's normal market behavior: when things crash, people look for what hasn't crashed as much and try to flip it into the crashed assets to capture upside.
SURGE is built to protect your downside during times like this. It's doing exactly that. HIVE was worth $0.18-$0.20 during most of the presale. The presale for SURGE was priced at 4 HIVE per SURGE.
4 HIVE is trading for ~$0.52-$0.55 right now.
SURGE is trading $0.23 higher at $0.75 or 44% above the 4 HIVE per SURGE presale price.
This means that if you swapped HIVE for SURGE, you've performed incredibly well even though SURGE hasn't regained the $1 peg price.
Now all you need to do is wait. Wait for SURGE to rubber band back to its peg and you are a winner in any terms you look at it. If you swapped BTC for SURGE, you're profitable. If you swapped USD for SURGE, you are profitable. If you swapped HIVE for SURGE, you are profitable.
Perspective matters. Don't forget to take a step back and look at all other assets, not just the $1 peg.
This all being said, SURGE will regain the $1 peg one day. If it doesn't, then you will simply get paid out in one of the two other ways (Liquidation Preference or LSTR Conversion).
Dips Are Opportunities, Not Red Flags
I've seen a lot of sentiment asking why SURGE isn't at the $1 peg. That's why I'm writing this post. I am quietly buying up SURGE (well, not that quietly. I am posting about it on Threads regularly).
Remember that famous Buffett quote? Buy when there's blood in the streets.
You buy when others are fearful.
You sell when others are greedy.
Right now, I see fear. I see people wondering why SURGE is at $0.75 and not $1. They don't understand the math. Most presale buyers are up 50% in HIVE terms (since SURGE is trading for 5.5-6 HIVE per SURGE) and they are up a few % in USD terms.
Isn't it natural some will take profits on SURGE right after the presale ends?
Isn't it natural they will walk away happy?
Isn't it natural they will sell to someone else who understands SURGE's peg mechanics?
The market doesn't make mistakes. The market is hyper efficient. Let the market do what the market does and build your house upon it.
Every dip in SURGE's price leads to more reasons to buy it. The effective yield increases and the profit to re-peg increases. Refer back to the chart I shared above any time you question this.
Why I'm Acting, Not Waiting
I love to get paid to wait. My action is to buy SURGE, then I wait.
I buy SURGE and I get paid to wait for it to re-peg. The lower SURGE goes, the higher my effective yield is and the greater the profit is to when it re-pegs.
Accumulators have the ultimate advantage. SURGE is profitable to those who understand the mechanics and trade not on hype, but on math and mechanics.
SURGE is a Yield Trade and the sooner you understand this, the sooner you can make the yield trade and profit from it. Or you can sit back with the SURGE you have now and wait for the re-peg; then wonder why you didn't take advantage of it too.
No way is wrong. You should do what makes sense for your portfolio. This is just me saying what I'm doing and responding to the questions I see on Threads related to the $1 floor price of SURGE.
My TLDR; message:
- The market does whatever the market wants. Don't fight it
- There are 3 ways to get the $1 floor price (not just from the market price)
- Trust the math and mechanics
- Trade the yield
- Every SURGE presale buyer is profitable by 40-50% in HIVE terms and most are profitable in USD terms. Wait for SURGE to rise and the profit margin will grow
- LeoStrategy is a masterpiece in strategic scaling. They are adding LEO to their balance sheet and have now built 3 profitable cross-chain market makers for LEO, LSTR and SURGE. Watching this unfold and participating is how we take LEO to $10 and beyond