Sierra has partnered with leading curator and quantitative analysis firm Gauntlet to enable PT SIERRA 06AUG2026 as eligible collateral on Gauntlet's USDT Frontier Vault on Ethereum.

Enabling SIERRA PTs as Collateral

Lending markets like Morpho have underlying markets for each collateral asset, which are aggregated together into a vault that lenders can supply liquidity to. Morpho has a diverse set of collateral, ranging from cbBTC and staked ETH to liquid vault tokens, their corresponding PTs issued via Pendle and other forms of RWAs.

PT SIERRA 06AUG2026 represents a strong collateral asset because:

• Short Maturity: The first market eligible on Morpho has just under a month until maturity, which helps to minimize large fluctuations in value due to changing market conditions. At maturity, PT SIERRA 06AUG2026 is redeemable for underlying SIERRA with no fees

• High Quality Underlying Assets: SIERRA is backed by investment-grade RWAs, including short-term commercial paper and AAA-rated CLOs, and overcollateralized lending against blue-chip cryptoassets via Morpho’s Gauntlet Prime Vault on Base

• Institutional-grade Infrastructure: Gauntlet has conducted extensive due diligence on Sierra’s entire stack, including vault infrastructure with OpenTrade, custody via Fireblocks MPC with backup security through Station70, and DeFi monitoring with Hypernative

• Consistent Yield: PT SIERRA 06AUG2026 is SIERRA’s third market on Pendle, which has consistently yielded 9-12%. This represents a significant premium to the borrow rate on Gauntlet's USDT Frontier vault, which unlocks PT looping opportunities

Why Partner with Gauntlet

Sierra has an extensive history of partnering with Gauntlet, as the reserves backing SIERRA deployed in Morpho are allocated exclusively to the Gauntlet Prime vault. Historically, this allocation has represented between 20 and 60% of the total amount of reserves backing SIERRA.

We chose to work with Gauntlet because they are an industry leading curator and quantitative analysis firm, with more than $1.6B in deposits across all curated vaults with more than 150 integrations with fintechs and institutions. They have deep experience in systematically optimizing their allocation of liquidity across markets and sourcing capital through partnerships.

Looping SIERRA PTs, Explained

Looping means posting a yield-bearing asset as collateral to borrow against, buying more of the same yield-bearing asset, and repeating, to multiply exposure to the spread between the yield-bearing asset's return and the borrow rate. This is a common yield strategy used by sophisticated DeFi users and funds to amplify returns via lending markets like Morpho. 

The steps for looping SIERRA PTs are:

1. Acquire PT SIERRA 06AUG2026 through Pendle's Router, from SIERRA or from any asset directly

2. Supply it as collateral on Morpho and borrow USDC or USDT against it

3. Swap the borrowed stablecoins back into PT SIERRA

4. Redeposit and repeat until you reach your target leverage

As an example for illustrative purposes, assuming SIERRA PTs yield ~10% and the stablecoin borrow rate is ~5%, then at 3x leverage the position earns roughly ~20%. Note that this example excludes swap fees, slippage and gas costs, as well as assuming both the fixed yield on SIERRA PTs and the borrow rate on Morpho remain constant. 

Users considering to loop should understand the additional risks associated, including: 

• Interest Rate Risk: The stablecoin borrow rate is variable and could rise, which may cause the spread to compress or go negative

• Liquidation Risk: Leverage through looping amplifies sensitivity to changes in the PT's market price and a decrease in SIERRA PT’s value or a spike in borrow costs can push a position past its liquidation threshold

• Smart Contract Risk: Looping interacts with Pendle and Morpho, which introduces additional smart contract risk on top of holding SIERRA

• Liquidity Risk: Available secondary market liquidity on Pendle or Uniswap, as well as borrowing liquidity on Morpho, can change over time and affect the cost of entering, holding and exiting a position.

Where Does the Yield Come From

Using SIERRA’s transparency dashboard, the intrinsic yield is approximately 4%. On Pendle, SIERRA's implied yield has consistently traded higher, typically between 9% and 12%. That premium is not incidental, it is due to Sierra’s Summit Program.

Key details of the Summit Program include:

• Users will earn Peaks to track their participation in the program by holding and using SIERRA

• The Summit Program will conclude with the Token Generation Event (TGE) for the Sierra Governance Token (SGT)

• The Summit Program commenced on Thursday November 20th, 2025 and will conclude by the end of September 2026 at the latest 

• At TGE, Peaks will convert to SGT based on the share of the total supply of SGT allocated to the Summit Program

• At least 30% of the total supply of SGT will be allocated to the Summit Program

• There will be at most 100,000,000 Peaks issued throughout the Summit Program

• There will be no vesting, penalties or similar mechanisms on SGT received at TGE

• Distribution of Peaks is linear, which means that the Summit Program does not provide additional incentives to participants who spread their activity across multiple addresses

So to summarize, through the Summit Program, Peaks accrue to SIERRA Yield Token (YT) holders on Pendle. As users buy SIERRA YTs to get exposure to Peaks, the demand pushes the corresponding PT price into a deeper discount resulting in a higher implied yield.

"Making SIERRA PT productive collateral is a natural next step for increasing the utility of SIERRA. Gauntlet already curates the DeFi portion of SIERRA's reserves, so having them underwrite SIERRA PT in their Frontier Vaults extends that same risk framework to how holders put their PT to work. We will keep expanding the utility of SIERRA heading into the Sierra Governance Token launch in October 2026." said Mitchell Nicholson, Core Contributor at Sierra.