The Sierra Protocol is a decentralized money protocol that supports SIERRA, a Liquid Yield Token (LYT) built to deliver the best risk-adjusted returns across TradFi, CeFi and DeFi. Backed by a diversified portfolio of real-world financial assets (RWAs) and blue-chip DeFi collateral, Sierra delivers stable risk-adjusted returns, deep liquidity, and seamless integrations.

By holding SIERRA, users passively earn between 6 to 12% APY, compounded daily without any lock-ups, hidden fees, or requirements to stake or claim rewards. SIERRA is natively issued on the Avalanche blockchain and can be seamlessly bridged to Ethereum and other blockchain networks via our partnership with LayerZero. 

Understanding the fees associated with SIERRA is essential for users who want to optimize their returns and plan their interactions with the protocol.

Fees

SIERRA uses an exchange rate that increases (or decreases) as the value of the reserve assets increase (or decrease) in value, as opposed to a rebasing method. 

As a result, a user's balances of SIERRA always remain fixed unless they buy, sell, mint, redeem or transfer SIERRA tokens. This means that yield accrual is reflected as the difference between the current value of SIERRA relative to the acquisition price a user paid. 

There are several forms of fees that may be encountered while using SIERRA, including:

1. Gas Fees

Gas Fees is required to send transactions on the Ethereum and Avalanche blockchains, where Ethereum's gas fees are denominated in ETH and typically higher than fees in AVAX on Avalanche. 

2. Swap Fees

Swap fees are charged by decentralized exchanges (DEXs) and go directly to the liquidity providers (LPs) of SIERRA. DEX pools are currently set up on LFJ and Uniswap, with fees ranging from 1 to 5 basis points (bps) depending on the paired asset.

• Swaps executed via the Swap page on SIERRA’s website currently do not incur any additional fees beyond DEX LP fees and gas fees.
  
  

• In the future, an additional swap fee may be implemented on the SIERRA website, with all proceeds directed to the SIERRA treasury wallet.

3. Service Provider Fee

OpenTrade, as the service provider that manages all of SIERRA's reserves, charges a platform fee of 25 bps per annum. There are no other management, withdrawal or deposit fees charged by OpenTrade for the services provided to the Sierra Protocol. 

4. Sierra Protocol

Currently, the Sierra Protocol does not charge any fees on the total yield generated by the portfolio of reserve collateral. In the future, an additional fee on the yield generated by SIERRA's reserves may be charged, where all proceeds go to the SIERRA treasury wallet.

Frequently Asked Questions (FAQs)

What happens if I transfer SIERRA between wallets?

Transfers do not affect your SIERRA balance, but standard blockchain gas fees will apply.

How do gas fees affect my net yield?

Gas fees reduce the overall returns on transactions. Optimizing transaction timing or using networks with lower fees (e.g., Avalanche) can help minimize this impact.

Conclusion

SIERRA is designed to provide transparent and predictable yield exposure while minimizing unnecessary fees. Users only encounter fees that are essential to network operations, liquidity provision, and platform sustainability. 

Understanding these fees helps users plan their investments and make informed decisions while participating in the SIERRA ecosystem.