Now, you need to add the 10% dilution (assume 100% of SURGE converts to LSTR in the future). LPS will then be calculated as 4.6M LEO held / 110,000 LSTR outstanding = 41.81 LPS
So with maximum LSTR dilution from SURGE, LPS rose from 20 to 41.81. LSTR holders effectively just 2x'd their stack of $LEO
LSTR can be issued in a way that is non-dilutive to LPS by ensuring that the new LSTR shares raise capital that buys more LEO than the dilution of the new shares
In simpler terms, imagine a scenario like SURGE:
The SURGE presale sells ~$400,000 USD worth of SURGE at today's prices. This $400,000 USD acquires let's call it 2,666,666.666 LEO (this is using a higher than current LEO price to assume it climbs on the way to accumulating this amount - $0.15/avg buy price. LeoStrategy's AVG buy price is actually ~$0.105 right now)
So 2.6M LEO gets added to the balance sheet... at what cost? 500,000 SURGE can be converted into 10,000 LSTR in the future. So the dilution is 10% to all LSTR holders
At the start of the SURGE sale, LeoStrategy held less than 2M LEO. Let's just call it 2M to be round
LSTR's LPS at the start of the SURGE sale = 20 LPS
if LSTR is minted only against earned yield or protocol revenue, the pool’s share doesn’t shrink, and and LPs aren’t diluted. It’s like distributing from profits, not from thin air.
Now, you need to add the 10% dilution (assume 100% of SURGE converts to LSTR in the future). LPS will then be calculated as 4.6M LEO held / 110,000 LSTR outstanding = 41.81 LPS
So with maximum LSTR dilution from SURGE, LPS rose from 20 to 41.81. LSTR holders effectively just 2x'd their stack of $LEO
Does this make sense?
2/2
thanks, perfect.
LSTR can be issued in a way that is non-dilutive to LPS by ensuring that the new LSTR shares raise capital that buys more LEO than the dilution of the new shares
In simpler terms, imagine a scenario like SURGE:
The SURGE presale sells ~$400,000 USD worth of SURGE at today's prices. This $400,000 USD acquires let's call it 2,666,666.666 LEO (this is using a higher than current LEO price to assume it climbs on the way to accumulating this amount - $0.15/avg buy price. LeoStrategy's AVG buy price is actually ~$0.105 right now)
So 2.6M LEO gets added to the balance sheet... at what cost? 500,000 SURGE can be converted into 10,000 LSTR in the future. So the dilution is 10% to all LSTR holders
At the start of the SURGE sale, LeoStrategy held less than 2M LEO. Let's just call it 2M to be round
LSTR's LPS at the start of the SURGE sale = 20 LPS
LSTR's LPS at the SURGE sale = 46 LPS
1/2
if LSTR is minted only against earned yield or protocol revenue, the pool’s share doesn’t shrink, and and LPs aren’t diluted. It’s like distributing from profits, not from thin air.