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Reported by Cointelegraph, Hermetica has announced the launch of the first-ever Bitcoin-backed synthetic United States dollar with yield-generating capabilities in the latest development for Bitcoin-native decentralized finance (DeFi).
Slated for release in June, the new synthetic dollar, USDh, will offer users yields of up to 25%, according to Hermetica’s announcement shared with Cointelegraph.
The new synthetic dollar will enable Bitcoiners to hold and earn yield on their U.S. dollars without the need to trust the banking system or gain exposure to non-Bitcoin-related products, according to Jakob Schillinger, founder and CEO of Hermetica Labs.
Schillinger said:
“USDh will play a pivotal role in bringing increased liquidity and new use-cases to Bitcoin DeFi, allowing Bitcoiners to trade, lend, and transact in a dollar asset that is fully backed by Bitcoin.”
Hermetica is a Stacks-native DeFi protocol on Bitcoin and part of a wider movement known as Bitcoin DeFi (BTCFi), which aims to bring DeFi capabilities to the world’s first blockchain network.
According to Hermetica’s CEO, the yield is sustainable and derived from futures funding rates. Schillinger explained:
“This Bitcoin-native yield fluctuates with the market’s demand for long leverage. Our backtest data from January 2021 to March 2024 shows an average APY of 11.71%. In the 2022 bull market, the annual return was 26.11%.”
Schillinger added that the demand for Bitcoin futures will keep USDh yield sustainable:
“The yield is sustainable due to the structural demand for long leverage in the Bitcoin futures markets.”
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