Sky Frontier Foundation Q2 2026 Transparency Report

This report covers Sky Frontier Foundation's financial activity for Q2 2026, presented alongside prior quarter comparisons and 2026 year-to-date figures. It follows our inaugural transparency report, which covered the Foundation's activity from inception in June 2025 through to Q1 2026. 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

In Q2 2026, SFF received $20,000,000 in grant income, bringing total USDS grant income received since inception to $70,000,000. Beyond grant income, SFF continues to generate ongoing onchain yield across two streams.

Sky Savings Rate

USDS deployed into the SSR module generated $136,521 during Q2 2026, compared with $201,545 in Q1 2026, bringing the 2026 year-to-date total to $338,066. 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, with rewards accruing in SKY and compounding directly into the Foundation's locked treasury position. As these rewards accrue in locked SKY rather than available cash, they are reflected in the growth of the SKY treasury position below rather than in the revenue figures above.

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Deployment of Grant Funds

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

SKY Transactions 

No SKY purchase or transfer activity took place during Q2 2026. All SKY held in the SFF treasury remains subject to the same lock-up restrictions as the original endowment. Details of the 2025 buyback programme and the one-time, unconditional transfer of 500,000,000 SKY to Sky Protocol PauseProxy were covered in our inaugural transparency report.

Investments 

Under its mandate, SFF invests in projects and companies that it believes strengthen Sky Ecosystem and open digital financial networks. Total investment additions during Q2 2026 were $12,199,174, bringing total investments as at end of Q2 2026 to $36,398,822 deployed across two positions. 

Beyond the $16,000,000 USDS investment into Stablecoin Development Corporation (NYSE American: SDEV) made in January 2026, the remaining balance 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.

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Operating Expenses

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.

Q2 2026 expenses totalled $9,165,862, broadly in line with the $9,429,163 recorded in Q1 2026, down 2.8% quarter-on-quarter and bringing total expenditure for 2026 year-to-date to $18,595,025. With the significant scale-up in operations having taken place in Q1, Q2 reflects a stabilising run-rate, with the mix of spend continuing to shift towards direct support for Sky Ecosystem.

Public Goods expenditure increased 10.5% to $5,760,611, driven by a further ramp-up in Protocol Security and Maintenance spend as SFF continued onboarding protocol infrastructure contributors, partially offset by lower Sky Ecosystem Operational Costs. SFF Costs came in at $3,405,251, down 19.2% on Q1, as the internal cost base settled following the expansion of the Foundation's team and external service providers earlier in the year; reductions in operational and legal costs were partially offset by increased PR & Communications activity.

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Treasury & Borrowings

SKY Treasury (2,760,813,726 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. The movement in the USD value of SKY holdings over the quarter reflects the market price of SKY; the underlying token count continued to grow through compounding staking rewards.

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 Q2 2026, unchanged from end of Q1 2026; no further borrowing was required during the quarter, as grant income received in the period was sufficient to fund operations. Loan-to-value continues to be 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 Q2 2026 stood at $8,762,712, down from $13,018,713 at the end of Q1 2026. The reduction principally reflects operational expenditure of $9,165,862 and further investment deployment of $12,199,174, largely offset by grant income of $20,000,000 received in the period. No additional USDS was drawn against the SKY treasury during the quarter.

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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.