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: $20.9M on Avalanche and $15.5M bridged to Ethereum 

• Month-on-month TVL growth: 443%

• Highly successful first Pendle market: >11% average PT yields with institutional YT buyers. Our second market, running through July 1 is now live, with fixed PT yields of 11.85% at the time of writing

• Started laddering out our investment grade commercial paper exposure. Initial issuers include companies such as the London Stock Exchange Group and Lloyd’s of London

• SIERRA’s yield averaged 3.5% for the month 

• 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.

In our report last month, we mentioned that we were excited for our newest integration with OpenTrade, where OT’s customers could allocate to a vault and gain exposure to Sierra and managed Sierra DeFi strategies. This has proven highly successful to date, with nearly $17M allocated from enterprise clients, including large Latin American fintech companies. This vault has yielded 7-8% organically, proving highly attractive.

Several onchain vault and yield curators have also started to underwrite SIERRA for inclusion in their products, with one already actively allocating. We expect this to be a major source of growth over the coming weeks. Most notably, SIERRA PTs will likely be added to one or more curator’s Morpho vaults which will open the door to PT looping from funds looking to capitalize on SIERRA’s attractive PT yields. 

SIERRA targets a competitive volatility-managed and risk-adjusted yield while maintaining maximum liquidity through primary and secondary market venues. As of March 31, SIERRA’s intrinsic yield was 3.62% APY, and returned 3.48% 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

The biggest changes to SIERRA’s portfolio construction comes from the increasing allocation to investment grade commercial paper. Sierra leverages our partnership with FCA-regulated asset manager 5Sigma to source and manage our RWA exposure. Over the course of March, we have slowly been laddering out our CP positions, primarily focused on financial issuers. Companies include London Stock Exchange, Fidelity and Lloyd’s of London. We expect this to be a long-term portfolio allocation and will continue to further diversify exposure across issuers and tenors.

Next on the list of portfolio additions is the inclusion of AAA CLOs. Specifically, we will be adding Prudential’s PAAA ETF as a portfolio asset. 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. 

Since inception in 2023, PAAA has returned 6.5% (annualized) and 5.3% over the last year, presenting a highly attractive risk-reward trade off and strong addition to SIERRA’s reserves.

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. As a reminder, Sierra custodies all RWA products natively with tier 1 GSIBs, 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. 

Looking forward, there are a number of potential reserve sources we are currently underwriting. The most unique is a 6+ Sharpe trade finance product that provides investors with investment-grade exposure to SME importers and exporters in the bulk commodity space. We will provide a more detailed explanation of this product in next month’s report, but are very excited about the unique exposure, diversification and yield boost this brings to the portfolio. 

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 several integrations and partnerships with the best infrastructure providers in the space.

Our biggest new offering to clients around the world is a Sierra Managed LP vault, provided by OpenTrade. Fintechs, neobanks and exchanges can now allocate to managed SIERRA DeFi strategies (Uniswap and LFJ LP, Pendle LPs and SIERRA PTs) through the exact same form factor they use to access 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. Though not guaranteed, we expect this vault to yield almost double what SIERRA itself yields, and early interest in this product has been immense. 

This integration highlights the power of the Sierra and OpenTrade partnership. Enterprises around the world can seamlessly earn yield on their stablecoins from the widest range of sources in the industry (DeFi, RWAs, basis), and now can do so in the form factor that suits them best: direct vault integrations or through ERC-20 tokens. 

This has proven immensely popular for OpenTrade’s clients, and has attracted nearly $18M in capital inflows since going live just a few weeks ago. 

On March 1, we opened up our first Pendle market for SIERRA. Pendle is the industry’s leading yield trading protocol with over $2B on its platform currently while facilitating more than $50B in swap transactions in its history. Pendle allows users to split a yield-bearing token such as SIERRA into two component parts: a principal token (PT) and a yield token (YT). This is a very exciting rollout as this now unlocks novel new adoption paths for SIERRA holders. By purchasing a PT, users can lock in fixed-rate yields that are commonly well in excess of the underlying SIERRA intrinsic yield (e.g. 8%+). Alternatively, for users that wish to gain more explicit exposure to SIERRA yield and the Peaks allocation come TGE, users can purchase YTs. Finally, users can provide liquidity into the SIERRA market and earn from a combination of SIERRA intrinsic LP, protocol rewards and trading fees.

The first test market was successful by all accounts. PT yields averaged nearly 12% over the course of the month, institutional investors (including some of the most respected liquid funds in the space) started building SGT exposure through SIERRA YTs, and our market liquidity neared $9M. Our newest 90-day market is now live, seeded with nearly $12M in liquidity. At the time of writing, SIERRA PT’s are trading at an attractive 11.85% APY. 

We have a few exciting new integrations coming this month, including the expected creation of Sierra PT markets on Morpho. This opens the door for a wide range of allocators to start gaining exposure to SIERRA through borrowing against SIERRA PTs for increased yield. Conversations to date suggest the demand is strong for this. 

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