DeFi protocol Hermetica, the issuer of the Bitcoin-backed stablecoin USDh, has partnered with Velar to offer a 5% yield on USDh collateral for users of Velarโs PerpDex platform.
This collaboration enables Bitcoin traders to earn passive income by earning interest on their USDh collateral while trading Bitcoin perpetual futures.
Velar PerpDex and Bitcoin Layer 2 (L2) Solutions
Velar PerpDex allows leveraged futures trading on Bitcoin’s Layer 2 networks, including Stacks, the platform on which USDh is built.
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With the addition of a 5% yield on USDh collateral, traders can now passively grow their digital assets while engaging in high-leverage Bitcoin trading.
USDh yield is automatically earned on a weekly basis, providing consistent passive income for users as they participate in leveraged Bitcoin futures trading. This addition enhances the capital efficiency of Bitcoin traders by enabling them to maximize their collateral for additional returns.
Expanding Bitcoin’s DeFi Potential
USDh is the first Bitcoin-backed, yield-bearing synthetic dollar, offering Bitcoin traders the ability to earn interest on their collateral while engaging in DeFi activities.
The launch of USDh yield on Velar PerpDex marks a significant step forward in Bitcoin’s DeFi evolution, allowing traders to earn beyond just trading. It also highlights the expanding potential for Bitcoin to become a more integrated and efficient part of the DeFi.
Jakob Schillinger, CEO of Hermetica, emphasized, “USDh is the first stablecoin that enables Bitcoin traders to earn yield while holding long positions, unlocking a new opportunity for passive income in Bitcoin-native DeFi.”
Bitcoin DeFi: Growth With Challenges
Bitcoinโs DeFi market has grown significantly in recent years, fueled by Layer 2 solutions like Stacks that improve scalability and reduce transaction costs. The introduction of yield-bearing Bitcoin-backed stablecoins has also created new opportunities for passive income, attracting traders to engage in activities like lending and leveraged trading.
However, despite these advancements, the Bitcoin DeFi ecosystem remains fragmented. Different Layer 2 networks each have their own infrastructure, tokens, and protocols, which limits interoperability between them. This makes it challenging for users to easily transfer assets or liquidity across platforms and interact seamlessly within the broader DeFi space.
USDh’s Growing Liquidity and Its Role in Bitcoin DeFi
In January, USDh issuer Hermetica completed a deal with the Bitcoin lending protocol Zest, bringing USDh $3 million in liquidity and making it the largest stablecoin on the Stacks network. As of today, the total value locked (TVL) in USDh is slightly aboveย $5 million, according to Defillama.
Why This Matters
Stablecoins like USDh are crucial for Bitcoin to fully support DeFi, as they provide stability and a reliable store of value. However, USDh’s liquidity remains small compared to dominant stablecoins like USDT and USDC, underscoring that Bitcoin DeFi is still in its early stages.
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