Part 9/13:
Leo Strategy's capital structure leans on overcollateralization, ensuring that assets like tokenized stocks are backed by more LEO than their market value. With a baseline collateralization ratio—say 150%—the ecosystem maintains security even amid volatility. Revenue generated from trading fees, market making, and arbitrage leverages these pools to buy back and stake more LEO, further increasing the collateral and the per-share value.
Community members highlight that large volume trades, even by a single whale, can significantly enhance the total reserves and drive appreciation. For example, if a trade pushes the collateral above the target ratio, the excess can be used to overcollateralize previous assets or expand new product offerings, forming a repeating, reinforcing cycle.