A groundbreaking move by Hermetica, the Bitcoin-backed stablecoin platform, sees their synthetic dollar, USDh, introduced into the Stacks Bitcoin Layer 2 (L2) network. This integration makes USDh the first stablecoin backed by Bitcoin to be part of the rapidly expanding Stacks ecosystem.
Bitflow CEO, Dylan Floyd, expressed his enthusiasm for the launch, highlighting USDh’s qualities as a stablecoin fully backed by Bitcoin, offering capital efficiency and sustainable crypto-native yield. The launch of new pools for USDh in Bitflow’s AMM DEX aims to provide deep stablecoin liquidity for users.
The significance of USDh in Bitcoin DeFi lies in its provision of a stable, dollar-pegged coin backed exclusively by Bitcoin, enabling users to earn up to a 25% yield while operating within the Bitcoin ecosystem. This contrasts with traditional stablecoins linked to fiat currencies, giving users autonomy over their assets without reliance on third-party financial institutions.
Hermetica CEO, Jakob Schillinger, emphasized the importance of this integration, emphasizing the role USDh plays in increasing the infrastructure for Bitcoin L2s and supporting the scaling of Bitcoin DeFi on Stacks. The potential of USDh in tapping into the stablecoin market is evident as it offers a stablecoin backed by Bitcoin, facilitating seamless transactions on Bitcoin’s L1 and L2 networks.
With the stablecoin market valued at $160 billion globally and only 1% of Bitcoin’s $1.3 trillion market cap utilized by DeFi protocols, Hermetica aims to capitalize on this $360 billion opportunity. USDh’s peg to Bitcoin provides users with a stable, dollar-linked asset without needing to exit the Bitcoin ecosystem.
The success of USDh, initially launched on the Bitcoin Layer-1 Runes protocol and amassing $2 million in Total Value Locked (TVL) during a private whitelist phase, demonstrates the demand for Bitcoin-backed stablecoins in DeFi. The integration of USDh into platforms like Liquidium and MagicEden, coupled with Stacks’ upcoming upgrade in September 2024, which includes 5-second block times and full Bitcoin finality, is anticipated to drive DeFi growth and solidify USDh’s role in the platform and Bitcoin-backed financial tools in general.