Quick Facts:
- USDh developers Hermetica, a stablecoin built on Bitcoin layer 2 Stacks, have completed a deal to bring around $3 million in liquidity to the token.
- Hermetica and Bitcoin lending protocol Zest plan to offer yield on USDh through lending against sBTC.
- The initial liquidity boost could create a short-term window of higher yields, with projections as high as 50% APY.
The developers of USDh, a stablecoin built on Bitcoin layer 2 Stacks, have successfully arranged approximately $3 million in liquidity for the token. Hermetica, a decentralized finance (DeFi) protocol, has secured this liquidity, making USDh potentially the largest stablecoin on Stacks, thanks to their collaboration with Zest, a Bitcoin lending protocol.
The partners aim to provide yield on USDh by lending against sBTC, allowing users to utilize their Bitcoin wealth within the Stacks ecosystem. Initially, the liquidity injection could lead to enhanced yields, with Hermetica suggesting an annual percentage yield (APY) could reach as high as 50%. Currently, the average APY stands at around 18%.
Stablecoins play a vital role in the cryptocurrency ecosystem, providing users with a stable form of asset that is less affected by market volatility, as they are usually pegged to fiat currencies such as the U.S. dollar. With stablecoins gaining traction, this development supports Bitcoin’s evolution into a network capable of facilitating DeFi operations, which has been gaining momentum in recent years.
However, it’s essential to note that the $3 million liquidity provided for USDh is relatively small in comparison to major stablecoins like USDT and USDC, which boast market caps exceeding $138 billion and $51 billion respectively, underscoring the still-nascent status of the Bitcoin DeFi sector.
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