A financial structure called stretch removes Bitcoin's volatility by holding it as collateral at 10 times the dollar value of the instrument. You get a fixed 10% monthly yield in dollars, and even a 90% Bitcoin crash wouldn't touch your principal.
What happens if I strip away the volatility, strip away the risk, strip away or compress the duration, translate it to a given currency and extract the yield? That's what a Treasury credit instrument or Treasury preferred is. So that's what stretch is. The idea is you build something that's got 1 month, like I'm going to give you 10% dividend yield for 1 month. Like the duration is 1. Yeah, the yield is 10%. The currency base is US dollars. If I have a dollar of Bitcoin, I have a dollar of Bitcoin. If Bitcoin trades down 50%, I've lost half my money. But if I 10x overcollateralize something, I have $10 of Bitcoin, I have $1 of stretch. If Bitcoin trades down 50%, I still got a dollar of stretch. If Bitcoin trades down 90%, I still have a dollar of stretch. The statistical odds of Bitcoin trading down 90% are like point something, right? It's a small percentage. So by overcollateralizing, you strip away the risk by structuring it to adjustments or representations below par, below 100, you start to strip away the volatility on the downside.
