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 .
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.“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.
Similar concerns could arise for Hermetica’s USDh, as the 25% annual percentage yield is considerably higher than the 20% yield offered by Anchor Protocol on TerraUSD before the algorithmic stablecoin issuer Terra collapsed in May 2022. “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%.”“The yield is sustainable due to the structural demand for long leverage in the Bitcoin futures markets.”