DeFi Development Corp. closed its $11 million CHAD preferred stock offering on Sept. 8, creating a new financing channel for its Solana treasury strategy.
- DeFi Development closed an $11 million CHAD offering and received approximately $10.3 million net proceeds.
- CHAD sold at $8 per share with a $10 stated amount and 13% initial dividend.
- Company intends to use substantially all net proceeds to purchase additional SOL for its treasury.
- CHAD is perpetual non-convertible preferred stock ranking ahead of common equity but behind debt obligations.
- The first dividend payment is scheduled October 1 for shareholders recorded September 30, filings show.
The Nasdaq-listed company sold 1.375 million shares of Variable Rate Series C Perpetual Preferred Stock at $8 each. The security trades on the Nasdaq Capital Market under the ticker CHAD and carries a $10 stated amount.
DeFi Development received approximately $10.3 million in net proceeds after underwriting discounts, commissions and estimated expenses, according to its latest SEC filing. The company said it used the proceeds for general corporate purposes, including working capital, SOL purchases and strategic initiatives.
CHAD’s final offering was smaller than earlier terms
The completed offering differed from preliminary terms published earlier in September. DeFi Development previously proposed selling 2.2 million shares at $9 each, which would have generated $19.8 million in gross proceeds.
As crypto.news reported, those earlier CHAD terms included a $19.8 million offering and a possible 330,000-share overallotment. The completed transaction instead involved 1.375 million shares priced at $8.
The underwriter received a 30-day option to purchase another 206,250 shares at the final public offering price. R.F. Lafferty & Co. acted as the sole book-running manager.
DeFi Development’s final release said Fundstrat co-founder Tom Lee participated alongside other investors. Lee also serves as chairman of Ethereum treasury company BitMine Immersion Technologies.
The company calls CHAD the first SOL-backed “Digital Credit” instrument. This is DeFi Development’s description of the product, not a separate regulatory classification. Legally, CHAD is publicly traded preferred equity issued by a U.S. company.
The 13% dividend rate can change
CHAD begins with an annual dividend rate of 13%, calculated against its $10 stated amount. Because investors paid $8 per share, the initial effective yield is approximately 16.25%.
That yield is not guaranteed. Dividends are payable only “when, as and if declared” by DeFi Development’s board and when legally available funds exist. The board may review the dividend rate monthly or more frequently.
The company cannot reduce the rate by more than 50 basis points during a single adjustment. Management said it intends to use the variable rate to support CHAD’s market price within a longer-term range of $9.95 to $11.
That objective remains forward-looking. Dividend adjustments do not ensure that CHAD will reach or remain near its $10 stated amount.
DeFi Development established a reserve covering 12 months of dividends at the initial 13% rate. It deposited $1.30 per issued share into a separate account using existing cash, financial instruments or digital assets.
The first payment is scheduled for Oct. 1 and will cover the period from issuance through Sept. 30. Shareholders recorded at the close of business on Sept. 30 will qualify. Later dividends are intended to be distributed each business day after board approval.
CHAD gives preferred holders priority over common stock
CHAD is perpetual and has no scheduled maturity date. It is also non-convertible, meaning holders cannot exchange their preferred shares for DFDV common stock.
Preferred shareholders rank ahead of common shareholders for dividend payments and asset distributions during a liquidation. However, CHAD ranks below DeFi Development’s existing and future debt. It is also structurally junior to liabilities held by the company’s subsidiaries.
DeFi Development may redeem CHAD for $11 per share, plus accumulated and unpaid dividends, after its Nasdaq listing. It can also redeem all remaining shares following specified tax events or if outstanding CHAD shares fall below 25% of all shares issued across current and future offerings.
Because CHAD does not convert into common stock, the completed issuance did not increase DFDV’s common share count. Management consequently expects the transaction to increase SOL per common share after the proceeds are invested.
That outcome has not yet been established. It will depend on the amount of SOL acquired, transaction costs, SOL’s market price and changes in the company’s fully converted share count.
DeFi Development plans additional Solana purchases
DeFi Development said it expects to deploy substantially all net proceeds into additional SOL. However, its SEC filing also permits spending on working capital and strategic initiatives, meaning the full $10.3 million is not legally restricted to Solana purchases.
The company held approximately 2.33 million SOL and SOL-equivalent assets before the offering closed. In August, it acquired about 19,000 SOL at an average price of $98.14, as previously reported when its treasury reached 2.33 million SOL.
The reported treasury total includes SOL equivalents. DeFi Development has not provided a current breakdown separating native SOL, liquid staking tokens and other SOL-denominated holdings.
Unlike Bitcoin, SOL can generate staking rewards. DeFi Development operates validator infrastructure and also stakes tokens through external validators. Management argues that this yield could help support its preferred dividends and broader earnings.
Staking returns remain variable and cannot be treated as guaranteed income. They depend on network inflation, validator performance, delegated stake, fees and SOL’s dollar value.
DFDV common shares closed at $5.99 on Sept. 8, up approximately 2%. SOL traded near $104 on Sept. 9. No verified evidence directly connects either movement to the CHAD closing.
The next scheduled event is CHAD’s Sept. 30 record date, followed by its first dividend payment on Oct. 1. DeFi Development also plans to disclose updated SOL holdings and its SOL-per-share figure after deploying the proceeds.
