DeFi Development lifts the CHAD preferred dividend to 14% before up to $300 million of new issuance

What CHAD costs the company depends on what a share sells for. The 14% is a rate on a $10.00 stated amount ^[3], and the only sale so far priced at $8.00 ^[19], so the first buyers collect $1.40 a year on $8.00, or 17.5% on cost ^[13]. The company would pay that same 17.5% to raise new money at $8.00 (at $9.00 it would be 15.6% ^[14]). The board has also authorized a repurchase program with a focus on achieving the $10 par value ^[4]. A buyback aimed at par implies the shares trade below it. The report does not include a current price.

The size of the plan is the second number. Up to $300 million of new issuance is roughly 27 times the $11 million raised at launch ^[7]. Counted at the $10.00 stated amount, that is 30 million shares and $42 million a year of dividends at 14% ^[17]. Counted as cash raised at $8.00, it is 37.5 million shares and $52.5 million a year ^[18]. The report does not say which basis the $300 million uses.

The one-point increase, effective Nov. 2 ^[2], is cheap in itself. It adds $0.10 a share a year, so about $137,500 on the roughly 1.375 million shares that $11 million bought at $8.00 ^[15], and $3 million on 30 million shares if the full program sells at $10.00 ^[16]. We think the raise is aimed at the next sale, not the last one. According to Crypto Briefing, CEO Joseph Onorati pitched the higher rate as a way to make CHAD more appealing to investors who want income ^[5], and proceeds from future sales are expected to fund further SOL accumulation ^[6]. The pitch to common holders is SOL-per-share growth without new common stock ^[20]. The price of that is a claim fixed in dollars ^[12].

The company holds about 2.586 million SOL and equivalents ^[10] and aims to put them to work through strategies including staking ^[9]. The report does not include a SOL price or a staking yield, so dividend coverage cannot be computed from it. The hurdle is stated in the report: staking yield and SOL appreciation have to outpace the dividend over time for the structure to grow SOL per share ^[21]. On our numbers that means beating 14%, or 17.5% on money raised at $8.00.

This could go differently. CHAD could climb to $10 and the company could sell at 14%, in which case the raise did its job. The shares could stay near $8.00, leaving the board to choose between 17.5% money and an unused authorization. SOL could fall while the dividend stays put. We would be wrong if the company sells a large block while CHAD still trades near $8.00, because the increase would then not have lowered the cost of the money. The variable-rate structure lets the board change the payout again, and this is the first visible use of that lever ^[11].