Leostrategy recently published a post on the state of its current tokens: SURGE, TTLSA, TGLD and TNVDA. Looking at what they wrote, they raised several points that investors really have to think about.
The reason that most people jumped in on these tokens in the first place is because they are RWA tokens and they provide yield, something that most investors would want. Having a consistent stream of passive income generated from your assets just seemed very appealing.
Unfortunately, because of the constant slide in the crypto market and the continuous decrease in the value of BTC all four of Leostrategy's assets are now far down below their pegs. While the yield distribution has continued despite this, that fact has not prevented investors from complaining about the decline in value.
To address this, Leostrategy has now come up with a recovery plan across all four assets.
Instead of distributing weekly yield dividends as they have been doing, they will instead use the yield generated from each of the tokens and purchase the actual tokens in the market weekly. In short, instead of getting your yield, it will instead be used to buy back tokens to help them get back towards their peg.
This could be interpreted as if they are working towards having you accumulate value even though your tokens do not directly fall into your hands, but rather are kept locked away permanently in the RCBF forever. This means that this volume of tokens are removed from circulation and over time should increase value of the tokens in circulation.
In theory, this is a very strong recovery plan, and there will be a significant volume of capital that will be directed towards the market each week to buy back the assets. With consistent buy pressure being applied to each asset there should be increased pressure on prices to rise.
But will this work in reality?
It goes without saying that the prices should rise as much as the buybacks continue; however, it is also possible that as prices rise people will front-run the buybacks by selling in an anticipatory manner when they begin to move upward which will provide another source of concern.
Another potential source of investor concern may be that for many investors they wanted the yield to directly go to their hands rather than be used to buy back tokens that they already possess. In essence, investors could feel that Leostrategy is diverting away from what they had agreed to do and a shift away from what they wanted to have.
This is where it could really boil down to trust.
Many investors will feel that their trust has been slightly broken by Leostrategy and the change of direction for the product even though the investors themselves may benefit in the long run.
But if you consider this from a purely investment perspective Leostrategy has always been trying to benefit their investors who will make more from a buyback and re-pegging plan compared to what they have. The yield stop is temporary and once the token price reaches the required peg then the standard weekly yield should resume.
With the assumption that things will go right investors could potentially be 2x up on their current portfolio's value by the time that the buyback plan ends and because no purchased tokens are put back into the circulation, demand will only further continue to rise.
From this perspective this may turn into a situation where everyone wins as investors can potentially get back 2x their current value of their tokens, not only have their tokens returned to their original peg but they should be higher in value with increased investor confidence, while Leostrategy should ideally receive their initial value from investors back.
At this moment I feel investors should try and have some patience. It could end up being a plan that saves the assets or not. But If I'm in investors' shoes then I have to try and maintain as much trust as I possibly can as this is now in motion and if it fails, Leostrategy needs to be held accountable for the financial losses that investors may incur.
Now it is a matter of waiting.