Treasury Transparency

Real-time treasury composition, allocation breakdown, and on-chain verification methods. Updated quarterly with realized data.

Most DeFi protocols publish a TVL number and call it transparency. We publish the full balance sheet — assets, liabilities, allocation ratios, and the on-chain methods to verify every number yourself.

This page is modeled after MakerDAO/Sky's budget transparency approach, adapted for ETH Strategy's convertible-note treasury structure. Every metric below is either directly readable on-chain or derivable from on-chain state.

Core protocol contracts (esETH, CDT, EthStrategyConvertibleNote) are deploying soon. This page defines the transparency framework and will be populated with live data once contracts are deployed. Post-launch, metrics will be updated quarterly with realized values. All data will be verifiable on-chain.

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Balance Sheet

The protocol's financial position at any point in time, expressed as a balance sheet.

Assets

Asset	Description	On-Chain Source
Total esETH in treasury	All ETH-denominated assets held by the protocol, wrapped as esETH	esETH.balanceOf(treasury)
Underlying LST breakdown	Composition of esETH backing: wstETH, rETH, cbETH, weETH, aWETH	esETH.tokenBalances() per token config
Unencumbered esETH	"Free" capital available for lending operations and backing STRAT	Total esETH minus encumbered holdings
Encumbered esETH	Reserved to honor outstanding conversion rights (NFT options)	Sum of esETH conversion entitlements across all active notes
Accrued interest receivable	Interest owed by active Treasury Lending borrowers	Sum of accruedInterest() across active loan NFTs
Protocol-owned liquidity	LP positions managed by the Liquidity Multisig	Arrakis vault shares, Uniswap V3 positions

Liabilities

Liability	Description	On-Chain Source
CDT supply (total debt)	Total outstanding protocol debt obligations at face value	CDT.totalSupply()
USD notional owed at maturity	Dollar-denominated settlement obligations for all unexpired notes	Sum of settlementEntitlement across active NFTs
Conversion obligations	Maximum STRAT + esETH mintable if all active options are exercised	Sum of conversionEntitlement across active NFTs
ESPN vault liabilities	Obligations to ESPN depositors	ESPN.totalAssets()
Active loan principal	Outstanding Treasury Lending principal to be repaid	Sum of principal across active StratETHTreasuryLend NFTs

Equity (Net Asset Value)

Net Asset Value (NAV) = Total esETH in treasury − Encumbered esETH
ETH per STRAT (EPS) = Total esETH in treasury / STRAT totalSupply

EPS is the single most important metric for STRAT holders. See STRAT Economics for how it grows.

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Treasury Allocation

How the treasury's capital is deployed across functions. This breakdown shows what the protocol's assets are doing at any given moment.

Capital Allocation Framework

Total Treasury (esETH)
├── Encumbered Holdings (conversion reserve)
│   └── Cannot be lent or withdrawn — backs outstanding conversion rights
│
└── Unencumbered Holdings (operational capital)
    ├── Actively Lent (Treasury Lending)
    │   └── Fixed-rate loans to STRAT holders → interest flows to StakedStrat
    │
    ├── Available for Lending (idle capacity)
    │   └── Earning base staking yield only (~3% via underlying LSTs)
    │
    └── Protocol-Owned Liquidity
        └── LP positions managed by Liquidity Multisig

Key Allocation Ratios

Metric	Formula	What It Tells You
Encumbrance Ratio	Encumbered esETH / Total esETH	How much of the treasury is reserved for conversion obligations. Higher = more capital locked
Lending Utilization	Actively Lent / Unencumbered esETH	How much free capital is deployed as loans. Higher = more interest revenue but less liquidity buffer
Debt-to-Asset Ratio	CDT Supply (USD) / Total esETH (USD)	Protocol leverage. Higher = more aggressive growth, more maturity risk
Coverage Ratio	Total esETH (USD) / CDT Supply (USD)	Inverse of debt-to-asset. Must remain >1 for the protocol to be fully solvent at maturity
Interest Revenue Rate	Quarterly interest earned / Average unencumbered esETH	Annualized yield on deployed capital
EPS Growth Rate	(EPS_end − EPS_start) / EPS_start	Quarter-over-quarter growth in ETH backing per STRAT

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Revenue & Expense Tracking

Revenue Sources (Quarterly)

Source	Accrues To	Verification
ETH staking yield (harvested from underlying LSTs)	Treasury (EPS growth)	YieldHarvested events on esETH contract
Treasury Lending interest	StakedStrat → STRAT stakers	InterestPaid events on StratETHTreasuryLend
Implied option premium	Treasury (EPS growth)	Difference between ETH bonded and conversion entitlements granted
ESPN fee share	StakedStrat → STRAT stakers	Merkle distribution events
Delinquent fee forfeitures	Unencumbered holdings (EPS growth)	LoanDefaulted events on StratETHTreasuryLend

Operating Costs

ETH Strategy has no protocol-level fee extraction today. There are no:

• Management fees on treasury assets

• Performance fees on yield

• Bonding fees

• Staking/unstaking fees for STRAT

The protocol's only "costs" are the conversion obligations embedded in issued notes — these are structural, not operational expenses. When the team introduces fees in the future, they will be documented here with the governance proposal that authorized them.

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On-Chain Verification

Every metric on this page can be independently verified. You don't need to trust us — you can read the contracts directly.

Core Queries

Metric	How to Verify
Total esETH in treasury	Call esETH.balanceOf(treasuryAddress) on Etherscan
STRAT total supply	Call STRAT.totalSupply() → 0x14cF…A2f
CDT total supply	Call CDT.totalSupply() on the CDT contract (address TBD)
EPS	Divide total treasury esETH by STRAT total supply
ESPN TVL	Call ESPN.totalAssets() → 0xb250…5fE
Active loans	Query LoanOriginated / LoanRepaid events on StratETHTreasuryLend
Parameter changes	Monitor OwnerChangedPCF, OwnerChangedGCF, BorrowRateUpdated events (see Governance)
Multisig transactions	View on Safe Dashboard

Indexing & Dashboards

For automated monitoring, all key state changes emit indexed events. A Dune, Flipside, or custom subgraph dashboard can track:

• Treasury balance over time (esETH balance snapshots)

• Bonding volume per period (NoteBonded events)

• Conversion activity (NoteConverted events with STRAT minted / CDT burned)

• Lending utilization (LoanOriginated / LoanRepaid flow)

• Staking reward distributions (syncRewards calls on StakedStrat)

• ESPN deposits and redemptions

We intend to publish a public dashboards once core contracts are live, making all metrics accessible without requiring direct contract queries.

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Solvency Framework

The protocol's solvency — its ability to honor CDT redemptions at maturity — is the most important long-term health metric. We will report on it explicitly.

What "Solvent" Means

The protocol is solvent when the USD value of total treasury esETH exceeds the USD notional of outstanding CDT. In simpler terms: there's enough ETH to pay back all the debt at face value.

Coverage Ratio = Total esETH (in USD) / Total CDT Supply (in USD)

• Coverage > 1.0x — Fully solvent. All CDT can be redeemed at face value at maturity.

• Coverage = 1.0x — Breakeven. No margin of safety.

• Coverage < 1.0x — Undercollateralized. At maturity, CDT holders would receive pro-rata esETH (less than face value). See Conversion of Notes — Post-Expiry Redemption.

Stress Scenarios (Illustrative)

Scenario	ETH Price Change	Effect on Coverage Ratio
Base case	0%	Coverage stays at current level
Moderate drawdown	−30%	Coverage drops ~30% (CDT is USD-denominated, treasury is ETH-denominated)
Severe drawdown	−60%	Coverage drops ~60% — protocol remains operational but may be undercollateralized
Sustained bull	+50%	Coverage improves ~50% — treasury appreciates in USD terms

ETH Strategy cannot be liquidated regardless of coverage ratio. There are no margin calls, no forced selling. The coverage ratio matters at note maturity (~4.2 years from bonding), not day-to-day. A temporary drop below 1.0x does not trigger any protocol action — it simply means that if all notes matured today, some CDT holders would receive less than face value. See Risks for full analysis.

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What We Don't (Yet) Report

Transparency means being honest about gaps too. The following are not yet tracked but are planned:

Metric	Why It's Missing	Target
Realized EPS growth	Core contracts not yet deployed	Q3 2026
Lending utilization	Treasury Lending launches Q2 2026	Q3 2026
Granular team budget	Pre-launch; spending is development-focused	H2 2026
Public Dune dashboard	Requires deployed contracts with event history	Q3 2026
Maturity schedule	No notes issued yet	Post-first-bond

We will update this section as gaps are closed.

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Further Reading

• STRAT Economics — how EPS grows and the revenue flywheel

• Yield Performance — historical yield data and projections

• How Treasury Accumulation Works — educational walkthrough of the treasury model

• Governance & Alignment — who controls what and parameter transparency

• Contracts — all deployed addresses for on-chain verification

• Risks — comprehensive risk analysis including solvency scenarios

Last updated: March 2026. First quarterly report: Q3 2026.