Reserve Strategy
SIERRA is the flagship LVT issued by the Sierra Protocol. SIERRA's Reserve Management Strategy is designed to allocate to institutional-grade RWAs and DeFi strategies, as well as using overcollateralized lending on Morpho and AAVE to generate competitive risk-adjusted returns while maximizing liquidity that supports expedited redemption capabilities.
Guiding Principles
The four guiding principles applied to SIERRA's Reserve Management Strategy are:
Maintaining Liquidity: Always holding 1-5% of reserves in a liquid buffer of USDC to support immediate redemptions, alongside deploying reserves into short-duration, highly liquid instruments such as commercial paper and AAA-rated CLOs
Risk Diversification: Reserves are spread across yield sources, spanning institutional-grade RWAs and blue-chip DeFi
Duration & Maturity Management: Reserves are deployed into short-duration, liquid assets to match to the immediate redemption capacity
Yield Enhancement: Achieved through allocating to basis, lending, commercial paper and AAA-rated CLOs
Whitelisted Yield Sources
Prudential AAA-Rated CLOs
xUSCLO
Backed by AAA-Rated Collateralized Loan Obligations through Prudential's PAAA ETF
35%
Investment-Grade Commercial Paper
xIGCP
Backed by a portfolio of commercial paper issued by Investment-Grade corporate entities with 30-60 day maturity, managed by Five Sigma Finance
35%
Morpho Gauntlet Prime Vault (Base)
xMorphoGPUSDC-Base
Backed by overcollateralized lending against blue-chip cryptoasset collateral like cbBTC and wsETH
60%
TradeFlow Trade Finance
xTradeflowCEMP90-USDCAva-1
Backed by Obligate eNotes, which lends capital to the TradeFlow Capital Management's CEMP USD Trade Flow Fund
15%
OpenTrade Stablecoin Staking Yield
xSOLY
Backed by a basis strategy that is generated from Solana (SOL) staking rewards and SOL perpetual futures funding rates. The strategy is delta-neutral to mitigate price volatility of SOL
20%
FalconX Prime Brokerage Lending
xDLF
Backed Pareto's vault that lends to FalconX through an SPV to facilitate financing to end-counterparties (Trading Firms, Hedge Funds etc.) while being backed by layers of structural protections, including an equity tranche, transaction-level collateralization, and real-time risk engine
20%
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