🧠Reserve Strategy
Learn more about Sierra's reserves
SIERRA’s reserve strategy is designed to deliver a balance of liquidity, risk management and yield. Underpinning this reserve strategy is a robust risk management framework which analyzes each yield source across 11 types of risk.
Here are the core principles that guide the reserve strategy:
Maintaining Liquidity: A considerable portion of the reserves are allocated to lower yielding strategies in order to optimize for immediately liquidity, which enables the Sierra protocol to meet significant redemption requests 24/7/365. Some of these lower yielding, higher liquidity strategies include money market funds, commercial paper, AAVE & SKY.
Risk Diversification SIERRA’s portfolio of reserves are diversified across yield sources, counterparties and smart contract platforms to help mitigate downside risk and create a more robust blended yield. All RWA yield sources have been rated investment-grade by third party, institutional rating agencies.
Duration & Maturity Management: SIERRA's portfolio of reserves is designed to maintain a low duration across yield sources, which reduces sensitivity to interest rate changes and allows for rapid rebalancing in response to changing market conditions or redemption requests. Additionally, there is limited maturity transformation between SIERRA's reserves and the corresponding yield sources, which helps to ensure SIERRA can always meet redemption requests as they arise.
Yield Enhancement: After accounting for liquidity, diversifying risk and managing asset and liability maturities, the reserve strategy aims to enhance overall yield generated through higher yielding sources to help boost the blended yield of the portfolio.
Who Oversees SIERRA's Reserve Strategy?
Initially, the Reserve Strategy is governed by an independent Board of Directors at the Sierra Foundation. In addition, there is an Advisory Council composed of experts in stablecoins, DeFi, traditional asset management and risk modelling to help guide setting and updating the Reserve Strategy. The key responsibilities of each group are:
Board of Directors:
Holds final authority over reserve asset allocations. Reviews and approves allocation changes, new yield sources, and risk exposure limits per yield source
Ensures alignment with legal, regulatory, and financial standards
Advisory Council:
Conducts due diligence on potential reserve yield sources, counterparties, and custodians
Monitors trends in DeFi and traditional markets to assess yield, risk, and liquidity dynamics
Recommends adjustments to portfolio allocations based on performance, market conditions, or macroeconomic changes
This dual-tiered governance model ensures that the reserve allocation behind SIERRA is non-discretionary and driven by the risk framework, while being accountable to a formal decision-making structure. It is designed to balance innovation with prudence, providing users confidence that the portfolio allocation backing SIERRA is both rigorously constructed and professionally managed.
In the future, the governance process for SIERRA's reserves may include broader participation from industry experts and SIERRA holders to better align incentives and crowdsource more expertise and insights.
Powered by OpenTrade
The Sierra protocol and SIERRA's reserves management is powered by the service provider OpenTrade, a market leading provider of stablecoin yield products backed by investment firms like a16z Crypto, Circle, AlbionVC, Kronos Research, Mercury, Notion and CMCC Global. As of September 2025, OpenTrade manages over $60M of assets across a variety of crypto exchanges, neobanks and fintech platforms distributed around the globe.
OpenTrade provides SIERRA with a suite of institutional-grade RWA and DeFi yield vaults, which supports Sierra's dynamically-rebalancing portfolio allocation. All vaults are held in bankruptcy remote accounts with Tier 1 financial institutions and the portfolios of collateral backing these vaults are managed by an FCA regulated asset manager.
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