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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 Hermeticas 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 told Cointelegraph:

Hermetica is a Stacks-native DeFi protocol on Bitcoinand part of a wider movement known as Bitcoin DeFi (BTCFi), which aims to bring DeFi capabilities to the worlds first blockchain network.

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The launch of the first Bitcoin (BTC)-backed synthetic dollar comes two months afterEthenas USDe launched with a 27.6% yield for holders, creating widespread concerns about the protocols sustainability.

Similar concerns could arise for Hermeticas USDh, as the 25% annual percentage yield (APY) is considerably higher than the 20% yield offered by Anchor Protocol on TerraUSD (UST) before the algorithmic stablecoin issuer Terra collapsed in May 2022.

According to Hermeticas CEO, the yield is sustainable and derived from futures funding rates. Schillinger explained:

Schillinger added that the demand for Bitcoin futures will keep USDh yield sustainable:

Increasingly, more protocols are building more utility and DeFi capabilities around Bitcoin, the worlds most secure blockchain network. Schillinger believes that the introduction of Ordinals was among the most important catalysts for BTCFi. He said:

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Excerpt from:
First Bitcoin-backed synthetic dollar to launch with 25% yield - Cointelegraph