Sierra launches first dynamically rebalanced liquid yield token on Avalanche

Sierra Protocol has announced the launch of SIERRA, the first dynamically rebalanced Liquid Yield Token (LYT) on the Avalanche (AVAX) network, as per the reports shared with Finbold on Thursday, November 13. 

The new product aims to provide decentrilized finance (DeFi) users with passive, risk-adjusted yield through a diversified portfolio of real-world and on-chain assets.

Users can access SIERRA directly through the Sierra web app or swap USDC for SIERRA on LFJ (formerly Trader Joe), Avalanche’s largest decentralized exchange (DeX). Once purchased, yield begins accruing immediately, and there are no hidden fees, staking requirements, lockups, or minimum balances.

LYTs backed by yield-generating reserves

Unlike yield-bearing stablecoins, LYTs are not pegged to fiat currencies but backed by stablecoin reserves that generate yield, which accrues to token holders. SIERRA distinguishes itself as the first LYT backed by a diversified portfolio combining investment-grade real-world assets (RWAs) and blue-chip DeFi protocols.

Moreover, the reserve portfolio is dynamically rebalanced using Sierra’s proprietary Risk Framework, which allows allocations to adjust automatically as market conditions evolve. A Transparency Dashboard provides real-time data on performance and portfolio composition, with users able to access detailed metrics via website, CSV download, or API.

Partnership with OpenTrade 

Sierra’s reserve management strategy is powered by a partnership with OpenTrade, whose stablecoin yield-as-a-service infrastructure enables automated allocation between RWA and DeFi sources. Reserves may include U.S. Treasury money market funds, investment-grade commercial paper, and DeFi protocols such as AAVE, Morpho, Euler, Wildcat, and Pendle.

OpenTrade manages operational workflows for each yield source under a single protocol. All RWA collateral is held in secured accounts with Tier-1 financial institutions and managed by an FCA-regulated asset manager, while DeFi vaults are protected using Fireblocks’ whitelisting and policy-enforcement tools.

Mitchell Nicholson, Core Contributor at Sierra Protocol, said:

 “We’re very excited about the launch of SIERRA after many months of planning and building. We believe Sierra’s flexible reserve management strategy, combined with dynamic rebalancing capabilities, make SIERRA a unique offering that many DeFi users will prefer holding. We look forward to announcing many partnerships over the coming weeks that provide SIERRA with enhanced utility across both DeFi and CeFi.”

Dave Sutter, CEO of OpenTrade, added:

 “We’re proud that Sierra has chosen OpenTrade as the technical foundation to build such an innovative protocol as part of the fast-growing DeFi ecosystem. The simplicity, transparency and composability of Sierra represents a fresh approach to liquid yield tokens. Seeing the unique way Sierra utilizes OpenTrade’s institutional-grade infrastructure makes supporting its future growth so exciting. We look forward to continuing to support Sierra and its ecosystem for a long time to come.”

Eric Kang, Head of DeFi at Ava Labs, commented:

“Sierra’s launch on Avalanche shows how DeFi and real-world assets can work together. By building on OpenTrade’s infrastructure, Sierra makes earning on-chain yield simple, transparent, and accessible to anyone.”

Featured image via Shutterstock.