We are proud to provide the latest monthly report for the Sierra Protocol!  We will be publishing these regularly to ensure all community members have ready access to the most pertinent information across the Sierra ecosystem.

Please contact us at hello@sierralabs.xyz if you would like to explore partnership opportunities, have any questions, or generally have feedback on how we can improve SIERRA or this report going forward.

Highlights

• Total SIERRA outstanding: $28.3M on Avalanche and $22.1M bridged to Ethereum 

• Month-on-month TVL growth: 36.1%

• SIERRA PT yields: 10.8% and Pendle market size: $18.9M 

• Reserve additions: Prudential’s PAAA CLO ETF and continued to build out investment grade commercial paper exposure

• SIERRA’s yield averaged 3.57% for the month - expect this to start rising with new reserve additions

• The Summit Peaks program is in full swing and will run through TGE, which will occur no later than October 2026

TVL and Yield

SIERRA is unique in its approach to abstraction, security, transparency and simplicity, providing users with dynamically rebalanced risk-adjusted exposure to a diversified basket of RWA and blue chip DeFi yield sources, all wrapped in a single, non-rebasing composable token. Simply put, SIERRA reimagines what money can be.

Total value in the protocol continues to climb, even despite the growing apprehension around DeFi markets following the Resolve, Drift and now KelpDAO/Aave exploits. Total SIERRA minted grew 36% over the month, underscoring our position in the market as offering the best risk-adjusted yield in the industry. Among yield-bearing liquid tokens, SIERRA was the 2nd fastest growing in the industry over the month. The transparency, institutional-grade architecture, and security-first approach we implement, coupled with the low-risk and investment grade asset backing we select, differentiates us from the other offerings in DeFi. SIERRA’s value proposition is increasingly clear to allocators, treasury managers and CFOs, and we continue to see flows moved away from more established protocols and into SIERRA.

SIERRA targets a competitive volatility-managed and risk-adjusted yield while maintaining maximum liquidity through primary and secondary market venues. As of April 30, SIERRA’s trialing 7 day intrinsic yield was 4.60% APY, and returned 3.57% over the month on an annualized basis.

SIERRA is designed to reflect accrued yield in its price, rather than rebasing or through interest distributions, thus continuously increasing its exchange rate against USDC over time. This exchange rate is updated every 15 minutes to ensure the most accurate accounting possible as the underlying vaults appreciate in value. The SIERRA/USDC exchange rate can be seen below and can be viewed at any time, along with SIERRA’s APY as well as that of each underlying reserve vault, on SIERRA’s transparency dashboard: https://app.sierra.money/transparency.

Reserve Allocations

We continue to build out our investment-grade commercial paper reserve backing, all structured and managed by multi-billion dollar FCA-regulated asset manager Five Sigma Finance. Our portfolio is diversified across investment grade issuers and maturities - all sub-30 days currently - and can be viewed at any time through the reserve reports on our transparency dashboard here. The current portfolio is as follows, consisting of issuers such as Volkswagen, BP, Hyundai, John Deere, ING, London Stock Exchange and JLL:

We also initiated allocation to Prudential’s PAAA ETF, providing exposure to AAA CLOs. As a reminder, AAA CLO ETFs are exchange-traded funds that invest primarily in the senior-most (AAA-rated) tranches of Collateralized Loan Obligations. CLOs are structured vehicles backed by pools of corporate loans. The AAA tranches sit at the top of the capital structure and receive priority on interest and principal payments, offering investors floating-rate income with the highest credit protection within the CLO structure. To date, AAA CLOs have never suffered impairment, even throughout the 2008 financial crisis. 

Prudential’s PAAA is subadvised by PGIM Fixed Income, one of the largest securitized credit managers in the world, with $101 billion in securitized credit AUM including $55 billion in CLO tranches, and a dedicated team of nearly 30 investment professionals. PAAA is actively managed (not index-tracking) and with over $8B in AUM, it has become one of the largest CLO funds in the space.

We are the only protocol in the industry to provide exposure to this specific product, highlighting the unique capabilities of our architecture. As with all other RWAs, Sierra custodies products natively with tier 1 GSIBs such as BNY Mellon and Wilmington Trust, rather than holding onchain tokenized/wrapped versions. This drastically reduces counterparty and contract risk that most other allocators in the industry have to accept to gain exposure like this. 

Sierra’s reserve distribution overtime is shown below:

As a reminder, a full real-time breakdown of reserves are available at all times at https://app.sierra.money/transparency.

Integrations and Partnerships

Our goal is to maximize the utility of SIERRA across DeFi, CeFi and Tradfi through the broadest suite of integrations in the industry. But in order to do so, the foundations have to be in place that first make SIERRA the highest-quality, institutional grade yield bearing asset in the industry. As such, we are proud to announce our integrations and partnerships with the best infrastructure providers in the space:

The Sierra Managed LP vault, provided by OpenTrade, continues to be a major driver of SIERRA adoption. Fintechs, neobanks and exchanges can now allocate to managed SIERRA DeFi strategies (Uniswap and LFJ LP, Pendle LPs and SIERRA PTs) through OpenTrade’s industry-best stablecoin yield opportunities. This means that millions of users around the world can now earn yield from SIERRA DeFi opportunities, with all complexity completely abstracted away. TVL in this product is now up to $19.8M in capital, while earning ~6.5-8% on average.

Similarly, Pendle continues to be a major driver of inflows into the protocol. Our 2nd market, live for another 60 days, has consistently been one of the top markets on Pendle in terms of volumes and fixed-rate PT yields (10.5%+). Notably, these fixed rate yields are far higher than the underlying SIERRA intrinsic yield. Mechanically, this is due to the amount of participants that have been buying SIERRA Yield Tokens (YT) to gain pure exposure to the yield as well as earn Peaks in Sierra’s Summit Program. We are thrilled to see so much interest in the market around gaining exposure to our upcoming TGE.

The recent Resolv and KelpDAO/Aave incidents have understandably reduced risk appetite from curators on lending markets. We are still working towards having isolated markets created for SIERRA PT tokens on Morpho and supported by Tier 1 curators, though the timeline for this has been delayed due to how drawn out the Kelp/Aave market dislocation has been. We are still optimistic this will happen in the next few weeks.

Summit Program

As a reminder, we kicked off our points campaign, referred to as our Summit Program, in November. Participants are able to earn Peaks for engaging in a range of activities across DeFi and CeFi with SIERRA. We will continuously roll out new ways to participate as the Program continues, so be sure to check in frequently. 

Participants can view current opportunities and track their progress on our dashboard here: https://app.sierra.money/peaks. Epochs will run from Thursday 0:00:00 UTC through Wednesday 23:59:59 UTC, and updates to the dashboard will be reflected following the completion of each epoch.

As always, we are excited to have you join us as we build this novel protocol into the industry-leading liquid yield token issuer, with SIERRA as our flagship LYT. Stay tuned as we continue to roll out updates over the coming weeks and months, and please reach out if you would like to work together in any way. 

Thank you for your time and attention, and welcome to the Sierra Community! 

Sincerely,

Mitch and Kevin