USDh Stablecoin Achieves Significant Liquidity Milestone with $3 Million Support

Bitcoin-Based Stablecoin USDh Secures $3M in Liquidity

USDh developers Hermetica have completed a deal to bring around $3 million in liquidity to the token.

Collaboration with Zest Brings New Opportunities

Hermetica, a stablecoin built on Bitcoin layer 2 Stacks, has secured this liquidity through collaboration with Bitcoin lending protocol Zest. The two plan to offer yield on USDh through lending against sBTC, the bitcoin-backed bridging asset that users can use to put their bitcoin wealth in the Stacks ecosystem.

Potential for Higher Yields

The initial liquidity boost could create a short-term window of higher yields, Hermetica said, with projections of an annual percentage yield (APY) as high as 50%. Currently, USDh provides an average APY of 18%.

Role of Stablecoins in the Crypto Economy

Stablecoins play an integral role in the crypto economy, giving users a means of holding their assets in a token that isn’t prone to significant ebbs and flows in value. This is because they are pegged to a fiat currency (usually the U.S. dollar).

Significance for Bitcoin‘s Evolution

Provision for stablecoins would naturally be an important development in Bitcoin’s evolution into a network that can support DeFi capabilities, a trend that has gathered momentum in the last couple of years.

Comparison to Dominant Stablecoins

However, it is worth noting that the $3 million in liquidity provided by USDh is tiny compared to the dominant stablecoins in crypto. USDT and USDC have market caps of over $138 billion and $51 billion respectively, highlighting the relative infancy of the Bitcoin DeFi sector.

Read More: Circle Enters Tokenization Race by Acquiring Hashnote, $1.3B Real-World Asset Issuer