In a recent update, Hermetica, a platform backing stablecoins with Bitcoin, revealed the integration of its synthetic dollar, USDh, onto the Stacks (STX) Bitcoin Layer 2 (L2) network. This move marks a significant milestone as USDh becomes the first Bitcoin-backed stablecoin to enter the expanding Stacks ecosystem.
CEO of Bitflow, Dylan Floyd, expressed his enthusiasm for the launch, praising USDh for its attributes such as being fully bitcoin-backed, capital efficient, and offering a sustainable crypto-native yield. Bitflow aims to introduce new pools for USDh in its AMM DEX to provide deep stablecoin liquidity to users, facilitating easy swapping with other SIP10 tokens.
USDh plays a crucial role in Bitcoin decentralized finance (DeFi) by offering a stable, dollar-pegged coin backed entirely by Bitcoin. This unique feature allows users to earn up to a 25% yield while operating within the Bitcoin ecosystem, granting full asset control without third-party financial institutions involvement.
Hermetica’s CEO, Jakob Schillinger, highlighted the significance of integrating USDh into the Stacks network, emphasizing the importance of leveraging Bitcoin L2s to scale Bitcoin effectively. This move is expected to enhance Bitcoin-backed yield opportunities and offer a liquid dollar asset essential for scaling Bitcoin DeFi on Stacks.
Despite the stablecoin market’s significant growth to $160 billion in the past five years, Bitcoin’s extensive $1.3 trillion market cap remains largely untapped in decentralized finance (DeFi) protocols. Hermetica aims to tap into this massive opportunity by providing a stablecoin backed by Bitcoin that seamlessly transacts on both Bitcoin’s L1 and L2 networks.
USDh’s peg to Bitcoin sets it apart as a stable, dollar-linked asset that remains within the Bitcoin ecosystem. This unique positioning is expected to bolster DeFi liquidity, as noted by Zest’s CEO Tycho Onnasch, endorsing USDh’s potential in becoming a central element of the Stacks ecosystem.
The successful launch of Hermetica’s USDh on the Stacks network has received positive reception from industry players like Velar, who praise the stablecoin’s resilience and accessibility to users. With considerable Total Value Locked (TVL) amassed during the private whitelist phase and integration into platforms like Liquidium and MagicEden, USDh has already marked its presence in the DeFi landscape.
As Stacks prepares for a significant upgrade in September 2024, including 5-second block times and full Bitcoin finality, the introduction of USDh stands as a pivotal accomplishment for the platform and Bitcoin-backed financial instruments at large.