Sky Frontier Foundation Publishes Q2 & Q3 2026 Transparency Report

This report covers Sky Frontier Foundation’s financial activity for Q2 and Q3 2026, presented alongside 2026 year-to-date figures. It follows SFF’s Inaugural Transparency Report, which covered the Foundation’s activity from inception in June 2025 through Q1 2026. In the interest of community transparency, this report sets out top-level financials, capital deployment, treasury operations, and key strategic positions to give the Sky Ecosystem community visibility into how SFF is allocating its resources in line with its mandate.

Revenue

Security & Maintenance Grant

Security & Maintenance Grants are funded from the security and maintenance allocation of the Sky Treasury Management Function (A.2.3.1.2.2 - Step 1: Security And Maintenance). During Q2 2026, SFF received $20M as a Security & Maintenance Grant, the first of these grants in 2026. The grant relates to Security & Maintenance services SFF has funded since its inception in June 2025: security, infrastructure, risk and liquidity, and incubation. This expenditure is reported under Operating Expenses below.

Genesis Capital

During Q3 2026, SFF received $30M of Genesis Capital, transferred from designated Genesis Capital Allocations as authorized in the Sky Atlas (A.2.8.2.8.2.2, A.2.8.2.9.2.2). The transfers were executed through the July 2 and August 27, 2026 Executive Votes. Genesis Capital is reported separately from grant income.

Yield Income

Beyond these, SFF continues to generate ongoing onchain yield across two streams.

Sky Savings Rate

USDS deposited in the SSR generated $137K during Q2 2026 and $63K during Q3 2026, bringing the 2026 year-to-date total to $401K. SFF recognizes this yield only on withdrawal, when sUSDS is redeemed for USDS and the gain is realized. At that point, the yield becomes available cash.

Sky Staking Rewards

SFF stakes its SKY and earns staking rewards. During Q2 2026, these rewards accrued in SKY: SFF earned 39M SKY, which compounded directly into the Foundation’s locked treasury position. During Q3 2026, SFF’s staking rewards switched from SKY to USDS. Rewards paid in USDS are available cash and are included in revenue as SKY Staking Rewards (USDS): SFF earned $406K in Q3 2026. Further detail on SKY staking rewards is available at sky.money/stake-sky.

As rewards earned in SKY 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.

Capital Deployment

SFF deploys capital across two areas in line with its mandate.

SKY Transactions

During Q2 2026, SFF’s only SKY activity was claiming and restaking its staking rewards. During Q3 2026, a market-making token loan that SFF had assumed through novation matured, returning 36,559,002 SKY to SFF. SFF will redeploy the returned SKY into new market-making activities with selected market makers to provide market liquidity. SFF made no other SKY purchases or outbound transfers in either quarter.

Investments and Financing

Under its mandate, SFF invests in and provides financing to projects and companies that it believes strengthen Sky Ecosystem and open digital financial networks. Additions were $12.2M during Q2 2026 and $10.9M during Q3 2026, bringing the total as of the end of Q3 2026 to $47.3M.

SFF’s investment in Stablecoin Development Corporation (NYSE American: SDEV), first reported in the inaugural transparency report, is a strategic position that connects Sky Ecosystem with traditional capital markets. SDEV is a US-listed public company with SKY as its first and only approved treasury asset, and it stakes its SKY onchain. It gives capital-markets participants a way to gain exposure to SKY through a regulated US-listed company and the wider stablecoin economy. Under the terms of the investment, SFF secured the right to designate a director to SDEV’s board. SFF exercised that right in September 2026, with the appointment of one of its directors to the SDEV board.

Beyond the SDEV investment, the remaining balance relates to a loan facility to a related party, extended to finance Laniakea and AI research and development efforts for Sky Ecosystem, and the wider group of companies in which that work is undertaken. The facility bears interest at 15% per annum and is secured and overcollateralized. The net fair market value of the collateral exceeds three times the outstanding balance. Because it is a loan with repayment terms, SFF will report it under Investments and Financing moving forward.

Operating Expenses

Total expenditure for 2026 year-to-date was $27.7M. Quarterly spend has remained broadly stable: $9.4M in Q1 2026, $9.2M in Q2 2026 (down 2.8%), and $9.1M in Q3 2026 (down 0.6%).

SFF incurs expenses to fulfill its mandate to support the Sky Ecosystem. They fall into two categories: SFF Operations, which covers business development, communications, and marketing for the Sky Ecosystem, along with the strategy, operations, and legal functions that support this work; and Security & Maintenance, which covers security, risk and liquidity, infrastructure, and incubation.

Within Security & Maintenance, Security covers Sky’s cybersecurity function, funded within SFF, and protocol security services, such as smart contract audits and reviews. Risk & Liquidity covers Sky’s risk and data function, also housed within SFF, as well as risk framework development, analysis and monitoring, and liquidity services. Infrastructure covers protocol infrastructure and technical operations, including AI infrastructure development and maintenance for Laniakea.

Treasury & Borrowings

SKY Treasury (2,775,779,870 SKY locked in treasury)

SFF was initially granted approximately 2 billion SKY from Sky Protocol at inception, with additional SKY accumulated via SFF’s 2025 SKY purchases and SKY-denominated staking rewards. All SKY endowed to the Foundation is locked and is not available for sale or distribution; SFF’s mandate at present is to grow its overall SKY position over time. SFF has not exercised its voting rights and currently does not vote or delegate its SKY. Of the SKY locked in treasury, 2,714,074,035 SKY was staked as of the end of Q3 2026 to earn staking rewards.

SKY Holdings of $213.7M represent the market value (fair value) of SFF’s SKY at the period end date, September 30, 2026, compared with $203.0M at the end of Q1 2026 and $142.8M at the end of Q2 2026. Movements in the USD value reflect revaluation to market value at the period end date.

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 $37.1M as of the end of Q3 2026, unchanged from the end of Q1 2026. No further borrowing was required during Q2 or Q3 2026, as the Security & Maintenance Grant received in Q2 2026 and the Genesis Capital received in Q3 2026 were sufficient to fund operations. Loan-to-value continues to be managed conservatively to remain well clear of any liquidation threshold.

Cash Flow

Cash on hand at the end of Q3 2026 stood at $21.6M, up from $13.0M at the end of Q1 2026. The movement principally reflects the $20M Security & Maintenance Grant received in Q2 2026, Genesis Capital of $30M received in Q3 2026, and yield income received in the period, together with USDS received following the novation of an existing market-making loan, offset by operating expenses of $18.3M and investment and financing deployment of $23.1M. No additional USDS was drawn against the SKY treasury during the period.

Legal Notice

This report is published voluntarily by Sky Frontier Foundation ("SFF"), a Cayman Islands foundation company. Publication of this report does not create any obligation for SFF to publish further reports or to follow any particular reporting schedule, format or content. Subject to applicable law and any binding obligations, SFF may change or discontinue its reporting at any time.

The information in this report is provided for general information only. It is drawn from SFF's internal records and onchain data, is unaudited, and has not been independently verified. Figures may be rounded and are subject to revision. Digital assets are valued at market prices as of the stated valuation date; their value may change materially. To the fullest extent permitted by applicable law, SFF makes no representation or warranty, express or implied, as to the accuracy or completeness of the information and accepts no liability for any loss arising from reliance on it. SFF undertakes no obligation to update or correct this report, except as required by applicable law.

Nothing in this report constitutes investment, legal, tax or financial advice, or an offer, solicitation or recommendation to buy, sell or hold any token or other asset. Statements about SFF's future plans reflect its current intentions as of the publication date, may change and are not commitments. SFF does not control Sky Protocol or its governance and, in publishing this report, does not act on behalf of SKY holders or any other person. Publication does not create any fiduciary, advisory, or agency relationship between SFF and any reader. Use of this report is subject to the Terms of Use.