Debt Auctions

As mentioned in convertibles, MegaStrategy achieves leveraged exposure to ETH by issuing convertible debt (CVs). This is achieved through a debt auction mechanism, which is powered by the Axis protocol.

flowchart TD
    B[Buyers]

    subgraph Protocol
        Banker[Banker]
        P[Protocol MS]
        T[TRSRY]
    end

    subgraph Axis["Axis"]
        A[AuctionHouse]
    end

    Banker -->|1\. Provides cvUSDC| A
    B -->|2\. Provide USDC, price per cvUSDC| A
    A -->|3\. At settlement:<br />USDC| Banker
    Banker -->|4\. Deposits USDC| T
    A -->|5\. Claim cvUSDC| B
    T -->|6\. Withdraws USDC| P
    P -->|7\. Buys wETH| T

    style Protocol fill:#4169e1,stroke:#333
    style Axis fill:#b7410e,stroke:#333

Auction Parameters

When the debt auction is established, the following parameters are provided:

• The token ("quote token") that will be deposited by bidders (e.g. USDC)
• The quantity of quote tokens that will convert to 1 CV token (e.g. cvUSDC)
• The quantity of CV tokens that will be sold

The auction is structured as a price discovery sale (using a sealed bid auction format), where the auction will settle at the same price per CV token.

Bidding

Bidders will provide an amount of quote tokens they wish to bid, and their desired price per CV token.