> For the complete documentation index, see [llms.txt](https://docs.sierra.money/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.sierra.money/sierra/reserve-strategy.md).

# Reserve Strategy

SIERRA is the flagship Vault issued by the Sierra Protocol. SIERRA's [Reserve Management Strategy](/building-with-sierra/reserve-management-strategy.md) is designed to allocate to institutional-grade RWAs and DeFi strategies, as well as using overcollateralized lending on Morpho 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 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

<table><thead><tr><th width="125.25390625">Yield Source</th><th width="111.41015625">Vault Name</th><th width="390.16015625">Description</th><th>Maximum Portfolio Allocation</th></tr></thead><tbody><tr><td>Prudential AAA-Rated CLOs</td><td>xUSCLO</td><td>Backed by AAA-Rated Collateralized Loan Obligations through Prudential's PAAA ETF</td><td>       35%</td></tr><tr><td>Investment-Grade Commercial Paper</td><td>xIGCP</td><td>Backed by a portfolio of commercial paper issued by Investment-Grade corporate entities with 30-60 day maturity, managed by Five Sigma Finance</td><td>       35%</td></tr><tr><td>Morpho Gauntlet Prime Vault (Base)</td><td>xMorphoGPUSDC-Base</td><td>Backed by overcollateralized lending against blue-chip cryptoasset collateral like cbBTC and wsETH</td><td>       60%</td></tr><tr><td>TradeFlow Trade Finance</td><td>xTradeflowCEMP90-USDCAva-1</td><td>Backed by Obligate eNotes, which lends capital to the TradeFlow Capital Management's CEMP USD Trade Flow Fund</td><td>       15%</td></tr><tr><td>OpenTrade Stablecoin Staking Yield </td><td>xSOLY</td><td>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</td><td>      20%</td></tr><tr><td>FalconX Prime Brokerage Lending</td><td>xDLF</td><td>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</td><td>      20%</td></tr><tr><td>OpenTrade Prime+ (USDC)</td><td>xPPV</td><td>Backed by a curated portfolio of RWAs with an investment strategy that aims to deliver the fixed rate of returns, while maintaining sufficient liquidity to meet deposits and withdrawals at all times and to generate excess return through active asset–liability management (ALM). The strategy will be deliberately conservative, with the majority of assets allocated to highly liquid instruments such as money market funds and ETFs</td><td>        50%</td></tr><tr><td>OpenTrade Prime+ DeFi (USDC)</td><td>xPPDeFi-USDCEth</td><td>Prime+ DeFi is actively managed by AWR Capital, a London-based algorithmic trading fund. This strategy primarily allocates to delta-neutral funding rate arbitrage and basis/carry trades, focused on digital assets specifically.</td><td>         20%</td></tr></tbody></table>

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**Disclaimer:** Holding SIERA does not make you a lender to, investor in or creditor of any underling OpenTrade Vaults, and gives you no claim on the reserves backing SIERRA. Redemption may be delayed or suspended. Returns are variable and not guaranteed, and you can lose everything you deposit. Read the [Sierra Terms & Conditions](https://docs.sierra.money/additional-resources/sierra-terms-and-conditions) before you mint, buy or hold SIERRA.
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