Sky Frontier Foundation Publishes Inaugural Transparency Report

This report covers Sky Frontier Foundation's financial activity from inception in June 2025 through to Q1 2026 year-to-date. In the interest of community transparency, we are sharing top-level financials, grant fund deployment, treasury operations, and key strategic positions — giving Sky Ecosystem a clear picture of how SFF is stewarding its resources in line with its mandate.

Revenue

SFF's initial grant comprising $50M USDS alongside various other assets was received at inception and is reflected in the figures below. Beyond the one-time grant, SFF generates ongoing onchain yield across two streams.

Sky Savings Rate

USDS deployed into the SSR module generated $162,594 between inception and year-end 2025, growing to $201,545 in Q1 2026. SFF recognises yield on this position only at the point of withdrawal, when sUSDS is swapped back to USDS and the gain is crystallised — at which point it becomes available for operational deployment.

Sky Staking Rewards

SFF's SKY holdings are staked via Sky Protocol. During H2 2025, staking rewards were distributed in USDS, generating $4,679,189 before the reward structure switched to be SKY-denominated.

Deployment of Grant Funds

Grant income received from Sky Protocol has been deployed across two areas in line with SFF's mandate.

SKY Transactions

During H2 2025, SFF deployed $45,106,231 to acquire approximately 662 million additional SKY tokens. All purchased SKY was held in the SFF treasury subject to the same lock-up restrictions as the original endowment.

Also during H2 2025, SFF made an unconditional transfer of 500,000,000 SKY to Sky Protocol PauseProxy, in alignment with its mandate of furthering, protecting and helping the growth of Sky Protocol. The transfer was a one-time, unconditional gift. SFF will take no further action in relation to it, and from receipt, any use of the assets is determined exclusively by Sky governance through its ordinary processes. Full details of this transfer were published at the time: SFF Notice — Unconditional Transfer of 500,000,000 SKY to the Sky Protocol PauseProxy.

The remaining balance of the purchased SKY sits in the SFF treasury, alongside the original endowment and accumulated staking rewards.

Investments

Under its mandate, SFF invests in projects and companies that it believes strengthen Sky Ecosystem and open digital financial networks. Total investments as at end of Q1 2026 stand at $24,199,648 deployed across two positions.

SFF deployed $16,000,000 USDS into Stablecoin Development Corporation (NYSE American: SDEV) in January 2026 as part of a PIPE financing, co-investing alongside Tether Investments, R01 Fund LP, and Framework Ventures IV. SDEV has pivoted to an onchain holding company with SKY as its first and only approved treasury asset, now holding approximately 2.15 billion SKY tokens (~9.15% of total supply) and actively staking onchain. As covered in our March Financial & Operational Update, SDEV defines itself as one of the first US-listed public companies to hold SKY as a designated treasury asset, giving capital-markets participants a regulated avenue through which to gain SKY, and wider stablecoin economy exposure.

The remaining $8,199,648 relates to a further investment that remains confidential at this stage. Consistent with SFF's practice on prior positions, full details will be published once the underlying transaction permits disclosure.

Operating Expenses

Total operating expenses from inception through year-end 2025 came in at $5,829,902. As SFF only began operating in June 2025, this represents approximately seven months of activity. Spend ramped gradually through H2 2025, with a step-up in Q4 as the Foundation began scaling ahead of a more active 2026.

Expenses are split across two categories: SFF Costs, covering the Foundation's own operational running costs, PR, communications and legal; and Public Goods, covering expenditure directly supporting Sky Ecosystem. In H2 2025, the split was broadly even — $2,326,538 in SFF Costs and $3,503,364 in Public Goods.

Q1 2026 expenses totalled $9,429,163 — a material step-up from the H2 2025 run-rate, reflecting a significant expansion of SFF's internal operations alongside higher expenditure in support of Sky Ecosystem as SFF scaled into. The largest driver of growth was Public Goods, which increased to $5,215,325 primarily reflecting a significant ramp-up in Protocol Security and Maintenance spend as SFF increased onboarding of protocol infrastructure contributors. SFF Costs grew to $4,213,839, driven by operational scaling as the Foundation expanded its internal team and external service providers.

Treasury & Borrowings

SKY Treasury (2,669,869,394 SKY locked in treasury)

SFF was initially granted approximately 2 billion SKY from Sky Protocol at inception, with additional SKY accumulated via the 2025 buyback programme and continuously compounding staking rewards. All SKY endowed to the Foundation is locked and is not available for sale or distribution; and SFF’s mandate at present is to grow its overall SKY position over time. SFF has not exercised its voting rights and does not vote or delegate its SKY.

USDS Borrowings

To fund operations without unwinding any part of the endowment, SFF borrows USDS against its SKY holdings as collateral. USDS borrowings stood at $37,100,000 as at end of Q1 2026, with loan-to-value managed conservatively to remain well clear of any liquidation threshold. This borrow-against-collateral model allows SFF to maintain operational liquidity while the endowment continues to compound via the Sky Staking Rewards.

Cash Flow

Cash on hand at the end of Q1 2026 stood at $13,018,713 down from $25,282,750 at year-end 2025. The reduction principally reflects the deployment of USDS into the SDEV strategic investment in January 2026, alongside the continued ramp-up of operational expenditure as SFF scaled into the new year.

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This report covers Sky Frontier Foundation's financials, not Sky Protocol's. For Sky Protocol financial reporting, operational updates and ecosystem data, visit financial.skyeco.com