Hermetica Labs launches USDh, the first Bitcoin-native synthetic USD

Hermetica
Labs,
a
decentralized
finance
protocol
built
on
top
of
Bitcoin,
has
launched
USDh,
the
first-ever
Bitcoin-native
synthetic
US
dollar.
The
new
offering
allows
users
to
gain
yields
of
up
to
25%
with
zero
exposure
to
traditional
finance.

Introducing
USDh
🎉

The
first
Bitcoin-backed,
yield-bearing
synthetic
dollar.

🔸
Backed
by

#Bitcoin
–
not
banks
🔸
Earn
up
to
25%
yield
🔸
Native
to
Bitcoin
L1
and
L2s

Join
the
revolution
now🧵👇

pic.twitter.com/lQCP3hS5Q9

—
Hermetica
(@HermeticaFi)

May
6,
2024

The
new
synthetic
dollar
is
designed
to
increase
liquidity
and
utility
to
the
decentralized
finance
ecosystem
formed
around
Bitcoin
through
L1
and
L2
protocols.
According
to
Hermetica
CEO
Jakob
Schillinger,
USDh
will
enable
Bitcoiners
to
hold
and
earn
yield
on
their
dollar
value
while
remaining
fully
backed
by
Bitcoin.

“USDh
is
a
groundbreaking
synthetic
dollar
fully
backed
by
Bitcoin
and
outside
the
fiat
system.
No
banks,
no
fiat,
just
Bitcoin,”
Hermetica
Labs
said
on
X.

The
launch
of
USDh
follows
the
introduction
of

Ethena’s
USDe
in
March,
which
offered
a
27.6%
yield
and
raised
concerns
about
the
protocol’s
long-term
sustainability.
Similar
questions
may
arise
regarding
Hermetica’s
25%
annual
percentage
yield
(APY),
which
significantly
exceeds
the
ill-fated
Anchor
Protocol’s
20%
yield
on
TerraUSD
(UST)
before
its
collapse
in
May
2022.

Notably,
Fantom
founder
Andre
Cronje
has

spoken
out
on
this
trend,
criticizing
negative
funding
rates
and
non-collateralized
stablecoins.

On
this
same
subject,
Schillinger
asserts
that
USDh’s
yield,
derived
from
Bitcoin
futures
funding
rates,
is
sustainable
due
to
the
structural
demand
for
long
leverage
in
Bitcoin
futures
markets.
Backtest
data
(as
gathered
by
Hermetica
Labs)
from
January
2021
to
March
2024
shows
an
average
APY
(annual
percentage
yield)
of
11.71%,
with
an
annual
return
of
26.11%
during
the
2022
bull
market.

The
introduction
of
Ordinals
has
been
a
significant
catalyst
for
the
growth
of
Bitcoin
DeFi
(BTCFi),
Schillinger
claims.
He
believes
that
BTCFi
will
match
and
eclipse
the
size
of
Ethereum
DeFi
within
the
next
five
years,
citing
instances
where
Ordinals

trading
volumes
have
surpassed
those
of
Ethereum
and
Solana
NFTs
combined.