DeFi
Hermetica Launches Bitcoin-Backed Synthetic Dollar
USDh is built on the Runes protocol and currently offers a staking yield of 12%.
Hermetica, a Bitcoin-based DeFi protocol, has launched USDh, a dollar-pegged asset native to the world’s most valuable blockchain.
THE project presents USDh as the “first Bitcoin-backed, yield-bearing synthetic dollar outside of the fiat system.”
The stability mechanism of USDh is similar to that based on Ethereum Ethena. Hermetica hedges its spot BTC holdings with short futures positions to ensure that USDh can always be exchanged for $1 worth of BTC. The financing fees accrued on these short positions are the source of yield for USDh stakers.
USDh Design
While the project claims a staking yield of “up to 25%,” application shows that sUSDh – the staked version of the token – is currently yielding 11.7%.
Hermetica builds on the Runes protocol, which launched in April as a more efficient way to write data to Bitcoin. The protocol aims to reduce the footprint of BRC-20, the previous iteration of fungible tokens that were responsible for network congestion and increasing fees.
USDh can be purchased with Bitcoin on the NFT market Magical Edenwhich has seen a 24-hour trading volume of just $10,000 since the token launched on July 16 – a far cry from the hype that accompanied the launch of Ethena’s USDe, which now has a market cap of $3.4 billion.
Users can stake their USDh on the Hermetica app and also have the option to borrow BTC against their holdings using Liquidiuma Bitcoin-based lending platform for ordinals and runes.
The lukewarm response to the launch could be due to a lack of awareness, as Bitcoin’s DeFi ecosystem is still in its infancy. Still, the emergence of a Bitcoin-native stable asset can be seen as a positive development if it can scale, as it offers Bitcoiners—who have long been wary of creating bridging assets to other blockchains—an alternative to the centralized stablecoins that dominate the market.