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

Please contact us at info@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

• Ethereum-native SIERRA grew from $70K to nearly $44M over the month 

• SIERRA PT yields: 8.14%, total liquidity: $17.4M, +/- 10% depth: $4.57M. New market launched Thursday August 6 and will continue until October 21

• Reserve additions: reintroduced Solana Staking + Basis and added new allocation to FalconX’s Institutional Credit Pareto Vault 

• SIERRA’s yield averaged 3.8% for the month - expect this to continue rising as we add new allocations

• Reminder: the Summit Program is in full swing and will run through the end of Q3

SIERRA Ethereum Support 

August was primarily defined by the transition of most funds in the original Avalanche-native SIERRA token to the newly launched Ethereum-native token. Users should expect the Ethereum-native version to be the predominant iteration of SIERRA going forward, though support for the Avalanche-native version will continue, DEX liquidity is maintained on Uniswap and LFJ, and Sierra’s vaults still remain on Avalanche as the default implementations. As of the time of writing, nearly all holders have transitioned to the new version, with just under $1M total TVL still held in the Avalanche version - depicted by the chart below. Going forward, we will primarily focus on the new version of SIERRA for this and following reports. 

TVL and Yield

Sierra’s TVL continued its strong growth, peaking at nearly $52M in August. As the primary liquidity asset for operating companies, we also pride ourselves in the ability to meet sudden liquidity needs for our partners. In June, elections in Latin America led to increased volatility in markets and Sierra was able to easily redeem nearly 15% of our TVL on demand to support partners’ liquidity needs. In the latter part of August, we similarly enabled partners to shift allocations to meet market demands. Total TVL in SIERRA now stands at ~$42M. We have some very exciting announcements to come here shortly that should lead to rapid new inflows, stay tuned! 

In our last report, we highlighted that we just crossed the $500,000 yield-paid-out threshold. We are now nearly at $700K and continue to accelerate: $160K now generated monthly, for an annual rate of nearly $2M paid out to partners.

SIERRA targets a competitive volatility-managed and risk-adjusted yield while maintaining maximum liquidity through primary and secondary market venues. As of writing, SIERRA is yielding 4.5% on an annualized basis over the past 7 days, up from a 7-day average of 4.2% as of August 31. 

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 continuously 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

There were no new reserve sources added in August, though we have since put on two new positions over the first week of September. 

We continue to add to our TradeFlow trade finance exposure as we ladder out maturities on that position further, reintroduced our sleeve of basis (built in partnership between OpenTrade, Figment and trading firm AWR), and instituted a new overcollateralized lending allocation through FalconX’s Pareto vault. 

As the leading institutional digital asset prime broker, FalconX and Pareto launched an evergreen, fixed-rate credit facility. The facility deploys capital into a bankruptcy-remote special purpose vehicle, which originates secured loans to FalconX. The capital is deployed by FalconX for client margin needs, hedging operations, and proprietary trading.

The vault has built-in risk mitigants for institutional lenders like Sierra. Every underlying loan is overcollateralized against a minimum 110% coverage ratio at origination, held in segregated custody with collateral eligibility restricted to major digital assets, and governed by enforceable Master Loan Agreement covenants. The vault’s fixed-rate yield is set monthly and changes are communicated with notice to help mitigate yield volatility. M11 Credit, an institutional digital asset credit manager and risk curator retains full responsibility for borrower due diligence, underwriting, covenant monitoring, and loan cycle administration. OpenTrade’s institutional-grade vault infrastructure enables access and performance tracking of the FalconX vault. More information on this strategy can be found here: https://blog.sierra.money/blog/reserve-strategy-institutional-credit.

Given the rise in yields both onchain and off, there is a growing opportunity cost to our commercial paper allocation. As such, we will start reducing its share in the portfolio as we allocate to more attractive yield sources.  As a reminder, our portfolio is diversified across investment grade issuers and maturities (all <60 day duration) - and can be viewed at any time through the reserve reports on our transparency dashboard here.

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.

Summit Program

As a reminder, we kicked off our points campaign, referred to as our Summit PEAKS 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.