Security, risk and operational processes in DeFi require constant vigilance. For Sierra, protecting SIERRA holders means monitoring not just our protocol, but every underlying yield source, secondary market liquidity pool for SIERRA, protocol integrations for SIERRA like Pendle, and large transaction that interacts with the protocol. That's why we rely on Hypernative, a leading real-time security and threat detection platform, to implement a comprehensive monitoring system.

What is Hypernative?

Hypernative provides real-time threat detection and monitoring for DeFi protocols, securing over $100B in onchain assets. Their platform detects the widest range of attacks with high precision accuracy, often identifying threats before the first malicious transaction occurs. For protocols like Sierra which deploys capital across multiple DeFi applications, relies on many OpenTrade vaults for its exchange rate automation, and has integrations with apps for the SIERRA token, this level of proactive monitoring is essential.

Monitoring Sierra's DeFi Yield Sources

Sierra deploys capital into blue-chip DeFi protocols like AAVE and Morpho to generate yield for SIERRA holders. These yield sources are analyzed through the lens of Sierra’s Risk Framework prior to being included into Sierra’s Reserve Management Strategy. Despite significant underwriting, recent exploits like the Balancer hack show that ongoing monitoring and alerting is an essential component of the risk management stack. As a result, whenever a new DeFi yield source is added to Sierra’s Reserve Management Strategy, we implement a full suite of monitoring and alerting coverage.

Through Hypernative, we monitor all DeFi protocols with capital deployed for any suspicious or unusual activity. This includes tracking utilization spikes that could signal potential issues, as well as monitoring anomalous activity on pools and vaults we're not using. Even if Sierra doesn't have funds deployed in a particular pool or network, unusual activity can be an early warning sign of broader exploits or vulnerabilities in the protocol.

In the unlikely event that one of Sierra's DeFi yield sources experiences a smart contract hack or exploit, Hypernative's system helps our team respond immediately to mitigate damage where possible.

Protecting Secondary Market Liquidity

Beyond our DeFi yield sources, we also monitor secondary market liquidity pools where SIERRA trades. This includes the SIERRA/USDC pools on platforms like LFJ on Avalanche and Uniswap on Ethereum, as well as the liquidity pool for SIERRA’s market on Pendle. If SIERRA's price temporarily trades below its underlying mint & redeem price, due to a large liquidation or similar market event, Hypernative alerts our team so we can respond and bring SIERRA back in line with its mint & redeem price. The alerting helps to ensure a liquid, orderly secondary market for SIERRA holders who want to buy or sell with minimal frictions.

Protocol-Level Monitoring

Hypernative also helps us track critical protocol events. We monitor large mints and redeems by Authorized Participants to ensure smooth operations, track movements out of Sierra's treasury wallet, and keep watch on Sierra's exchange rate automation. The exchange rate is designed to update every 30 minutes as yield accrues, and Hypernative alerts us if this process doesn't occur as expected. Altogether, this type of altering helps to ensure the protocol is operating smoothly and any issue related to minting, redeeming or exchange rate updating is addressed quickly.

Why Real-Time Monitoring Matters

Sierra has already implemented several key features, including smart contract reviews by Spearbit Cantina and utilizing Fireblocks for safeguarding reserves. By relying on Hypernative’s monitoring and altering tools, we now have the ability to detect and respond to threats or operational issues as they develop, rather than discovering them after the fact.

For SIERRA holders, this means an additional layer of protection built into the protocol and further demonstrates Sierra's broader commitment to security.