%Hermetica is launching the first %Bitcoin (CRYPTO: $BTC) backed synthetic U.S. dollar with yield-generating capabilities.
Scheduled for release in June, the new synthetic dollar, known as “USDh,” will offer yields of up to 25%, according to Hermetica, which calls the new product the “latest development for decentralized finance (DeFi).”
Specifically, the new synthetic greenback will enable people to hold and earn yield on their U.S. dollars without the need to rely on the banking system.
Hermetica is a stacks native DeFi protocol on Bitcoin and part of a wider movement known as Bitcoin DeFi (BTCFi), which aims to bring DeFi capabilities to the world’s leading %Blockchain network.
News of the synthetic dollar’s launch comes two months after Ethena’s USDe launched with a 27.6% yield.
Some %Cryptocurrency analysts have raised concerns that such high yields are not sustainable.
Previously, the TerraUSD (UST) algorithmic %Stablecoin offered users a 20% yield before it collapsed in May 2022.
Hermetica’s programmers have dismissed such concerns, saying the yield is sustainable and derived from future funding rates.
Hermetic also notes that the backing from Bitcoin provides stability as it is the world’s most secure blockchain network.
So far in 2024, Bitcoin’s price has risen 44% to trade at $63,500 U.S.