Sierra Expands Reserve Strategy to OpenTrade Prime+ Vault

Sierra has added a new Available Yield Source with a diversified, institutionally-managed credit portfolio by allocating part of the reserves backing SIERRA to OpenTrade’s Prime+ Vault.

Prime+ is actively managed by UK-regulated asset manager Five Sigma Finance and invests across asset-backed securities, mortgage-backed securities, CLOs and short-duration treasury instruments. The allocation expands the range of real-world assets backing SIERRA.

What is Prime+?

The OpenTrade Prime+ vault is designed to provide higher returns than short-term U.S. Treasury products while maintaining comparable liquidity through an actively managed fixed income portfolio. Eligible RWAs include asset-backed securities, mortgage-backed securities, CLOs and short-duration treasury instruments.

Prime+ investors earn a spread over government rates in exchange for credit and liquidity risk spread across thousands of underlying borrowers, rather than concentrated in a single counterparty or investment product. Much of the vault’s underlying assets are floating rate, so these securities can carry multi-year principal exposure while keeping duration risk, or interest rate sensitivity, low. Other risk management features include minimum thresholds on investment-grade allocations and a cap on unrated exposures, as well as single instrument concentration limits. 

New Yield Opportunity for Sierra Protocol and SIERRA

By adding Prime+ as an Available Yield Source, both the Sierra Protocol and its flagship vault, SIERRA, benefit through:

• Diversification: SIERRA’s reserve mix already spans investment-grade commercial paper, AAA-rated CLOs, perpetual futures basis, trade finance, DeFi lending and institutional digital asset credit. Prime+ adds exposure to consumer and mortgage credit across thousands of underlying borrowers
• Yield enhancement: The yield on the Prime+ vault is approximately 200bps higher than short-term U.S. Treasuries
• Scalability: A large universe of RWAs enables the vault to grow without diluting the vault’s yield

Institutional-Grade Approach

Sierra’s Advisory Council has applied the Risk Framework to this yield source and approved it for SIERRA’s Reserve Management Strategy. Given its credit and liquidity profile, the maximum portfolio allocation has been set at 50%.

As with all reserves backing SIERRA, Sierra uses Fireblocks for custody with controls covering address whitelisting, transaction policies, signing quorums and disaster recovery. OpenTrade’s end-to-end operations move capital from USDC onchain to securities safeguarded at Tier 1 banks.

SIERRA holders can verify the allocation in real time on the Transparency Dashboard and in Sierra’s weekly vault reports, supported by weekly attestations from Five Sigma.

All permissionless Vaults issued by the Sierra Protocol can now allocate to this yield source, giving asset managers, fintechs, exchanges and other issuing partners another way to tailor their risk, liquidity and yield profile. Get in touch with the Sierra team to learn more here. 

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