Hermetica Launches USDh, a Dollar-Pegged Asset Native to Bitcoin

The project touts USDh as the “first Bitcoin-backed, yield-bearing synthetic dollar outside the fiat system.”

Hermetica, a decentralized finance (DeFi) protocol powered by Bitcoin, has announced the launch of USDh, a dollar-pegged asset native to the world’s leading blockchain.

According to a press release shared with CryptoSlate, the project is touting USDh as the “first Bitcoin-backed, yield-bearing synthetic dollar outside the fiat system.”

The launch of USDh follows the footsteps of a similar Ethereum-based project, Ethena, which launched its dollar-pegged asset, USDe, earlier this year.

The stability mechanism of USDh is designed to ensure that it can always be redeemed for $1 worth of BTC. To achieve this, Hermetica hedges its spot BTC holdings with short futures positions.

The funding fees accrued from these short positions are the source of yield for USDh stakers. While the project claims a staking yield of “up to 25%,” the app currently shows that sUSDh – the staked version of the token – is yielding 11.7%.

Hermetica is also utilizing the Runes protocol, which was launched in April as a more efficient way to inscribe data on Bitcoin.

The protocol aims to reduce the footprint of BRC-20s, the previous iteration of fungible tokens that were criticized for clogging up the network and driving up fees.

USDh can be purchased with Bitcoin on the NFT marketplace Magic Eden, which showcases a 24-hour trading volume of just $10,000 since the token launched on July 16.

This is a far cry from the hype that accompanied the launch of Ethena’s USDe, which now boasts a $3.4 billion market capitalization.

In addition to being able to purchase and stake USDh on the Hermetica app, users can also borrow BTC against their holdings using Liquidium, a Bitcoin-based lending platform for Ordinals and Runes.

The tepid response to the launch of USDh could be attributed to a lack of awareness, given that the Bitcoin DeFi ecosystem is still in its early stages of development.

However, the emergence of a Bitcoin-native stable asset is a positive development that could offer BTC holders an alternative to the centralized stablecoins that currently dominate the market.

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