Hermetica has formed a collaboration with Velar to deliver a 5% annual yield for traders on the Bitcoin-backed stablecoin USDh through Velar’s futures exchange on the Stacks network.
Hermetica, the creator of the USDh stablecoin backed by Bitcoin, has joined forces with Velar to provide traders with a 5% annual yield when utilizing Velar’s perpetual futures exchange on the Bitcoin Layer 2 system, Stacks (STX), as revealed in a recent announcement.
This innovative feature enables users to generate yield on USDh while engaging in leveraged Bitcoin (BTC) trading.
Utilizing collateral effectively
This initiative represents a significant evolution in how collateral is employed by traders. Traditionally, when stablecoins are deposited to initiate leveraged positions on futures platforms, that collateral remains inactive.
In contrast, users trading on Velar PerpDEX with USDh can now accrue a weekly yield on their collateral without the necessity of staking or tying up their funds elsewhere.
Perpetual futures are a type of crypto derivative that allows traders to speculate on Bitcoin’s future price without needing to own the asset itself. Traders can take either long or short positions using leverage, which can increase both potential profits and risks.
The Velar PerpDEX introduces this type of trading into Bitcoin’s decentralized finance ecosystem via the Stacks network, enhancing Bitcoin with smart contract capabilities.
USDh is a synthetic stablecoin linked to the U.S. dollar, backed by Bitcoin. Unlike most stablecoins that rely on traditional fiat reserves, USDh is funded by BTC and is designed to yield returns automatically. Hermetica claims to be the first stablecoin offering yield within the Bitcoin-native DeFi realm.
This new integration aims to make capital utilization more efficient for traders, providing them with an opportunity to earn passive income from stable collateral while actively participating in BTC trading, which may draw more users into the emerging landscape of Bitcoin-based DeFi.