50 SURGE will trade for whatever 1 LSTR is worth (since that is what it converts into), once LSTR reaches $50. Before that happens, it will trade at $1.
An example, if you have 100 SURGE and LSTR is trading at $100, SURGE will trade at $2, since you could convert 100 SURGE into 2 LSTR and sell those 2 LSTR for $100 each, or $200.
To take it back one more step, if LEO is trading at $3 and the LPS is at 50, that means LSTR should trade for $150 at par (no premium). Since 100 SURGE could convert into 2 LSTR (worth $300), that means SURGE should trade at $3. If it were trading for $2, for example, someone could buy 100 SURGE for $200 and then immediately convert it into 2 LSTR and sell it for $300. Instant profit. Which is why the price of SURGE will move up and track the LSTR price.
Basically divide the LSTR price by 50(since that's how many SURGE it takes to get 1 LSTR) and that should be where SURGE trades. Again, this is after LSTR reaches $50. Before that, SURGE will trade a $1.
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This all assumes there are buyers for either coin at any of those prices, correct? Leo will always have buyers, but the other two are not so certain, correct? I'm assuming that is one of the downsides? What are some others? We need to know the good with the bad, thanks
SURGE will have an LP seeded with $50k once it sells out so it will obviously have buyers. LSTR has a LEO/LSTR LP right now so there's liquidity there as well. I view that as more of a long-term play anyway. There are only 100k in existence now, but I feel like LeoStrategy will sell another tranche at some point at a much higher number to raise another chunk of money to buy LEO.
Great explanation 👏