Introducing USDh: The first Bitcoin-backed, yield-bearing synthetic dollar

Hermetica
3 min readMay 6, 2024

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Today we’re introducing USDh, the first Bitcoin-backed synthetic dollar that yields up to 25%.

Until now, the Bitcoin ecosystem lacked an essential building block — a dollar asset that is:

  1. Fully backed by Bitcoin
  2. Outside the fiat system
  3. Yield bearing
  4. Native to Bitcoin L1 and L2s

We’re proud to announce that Hermetica’s USDh accomplishes all the above and finally brings the ideal synthetic dollar to the Bitcoin ecosystem.

USDh lets you hold dollars and earn yield without leaving Bitcoin. No banks, no fiat, just Bitcoin.

How it Works

The USDh ecosystem is made up of two assets:

(1) USDh a synthetic dollar consisting of Bitcoin coupled with a short futures position

(2) sUSDh a Bitcoin-native bond that generates up to 25% yield from funding rates

USDh and sUSDh will be issued on Bitcoin L1 via the Runes protocol as well as several Bitcoin L2s, starting with Stacks. Once released, USDh will be available to buy on popular DeFi markets like Magic Eden and Alex. To access the yield, users can stake USDh and immediately receive the yield-bearing token, sUSDh.

Historical Performance

Our backtests from January 2021 to March 2024 show an average APY of 11.71% from the short futures position.

This Bitcoin-native yield fluctuates with the market’s demand for long leverage: In the 2022 bull market the annual return was 26.11% while the 2023 bear saw a 2.82% return.

Rolling 30D Annualized Returns from Funding

Security

We use institutional-grade off-exchange settlement solutions that allow us to trade on centralized venues while holding the Bitcoin collateral in a bankruptcy remote trust.

With regular security audits conducted by independent third-party services (like Thesis Defense), Hermetica ensures that its infrastructure remains resilient against evolving security threats. Our commitment to security empowers users to confidently engage with our financial products, knowing their investments are well-protected.

About Hermetica

Hermetica is a crypto-native team with previous experience at Kraken, Bloomberg, and State Street; backed by the leading institutional asset manager, Two Prime.

We’re Bitcoiners building products for Bitcoiners.

Sign up to our waiting list at hermetica.fi to be among the first to get access to USDh when it launches in Q2 2024.

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Hermetica

The first Bitcoin-backed, yield-bearing synthetic dollar protocol.