Hermetica, the developer of USDH — a Bitcoin-backed yield bearing stablecoin announced that it raised $1.7M in seed funding today and simultaneously with launch their project publicly for anyone to use. The investment, spearheaded by UTXO Management moving forward is expected to catalyze the spread of USDH throughout the Bitcoin ecosystem with a specific focus on decentralized finance (DeFi).
Strategic Investment for DeFi Growth
Hermetica has secured backing from major investors like CMS Holdings, Ethos Fund and Trust Machines SPV. Leading angel investors — Tycho Onnasch (Zest Protocol) and Robin Obermaier (Liquidium) also took part. USDH intends to use the funds it has raised for growing its USD-H token adoption, bolstering liquidity and integration with Bitcoin’s Layer 1 (L1) and Layer 2 (L2) networks through offerings such as Stacks.
In the stablecoin market USDH is an example of a dollar pegged asset which uses Bitcoin as collateral. USDH differs from traditional fiat reserve-backed stablecoins by backing its CDP with Bitcoin to retain stability and allow users the ability of holding a dollar asset, without actually converting into fiat. Powered by sophisticated delta-hedging strategies, the platform is both capital-efficient and yield-generating.
Tapping into a Growing Market
The stablecoin market has seen rapid expansion, doubling annually and currently exceeding $160 billion. However, Bitcoin’s $1.3 trillion market cap has yet to see significant integration into DeFi, with less than 1% of its value locked in decentralized finance protocols. Hermetica aims to address this gap, positioning USDH as a crucial tool to unlock the $1 trillion potential within the Bitcoin DeFi space.
Hermetica’s CEO, Jakob Schillinger, emphasized the significance of stablecoins in a decentralized financial ecosystem, stating, “We believe stablecoins are a foundational building block for a decentralized financial system. USDH is the ideal Bitcoin-backed stablecoin—capital efficient, independent of the fiat system, and yield-generating.”
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Expansion and Future Plans
The funds will be allocated for improving the liquidity and trading conditions in order to support USDH on decentralized exchanges. Recognizing this, Hermetica has a vision and roadmap for how USDH could be the solution to address stability on the Lightning Network and beyond — as an efficient non-exchange laneway toward these “best-of-both-worlds” use cases.
Simon Shin, Managing Partner at Ethos Fund said: “Hermetica is releasing an amazing amount of value in the Bitcoin ecosystem. This is a huge opportunity for us to combine stablecoins and build on both the Layer 1 (the base layer of Bitcoin) as well as the Off-chain Lightning Network. USDH enables Bitcoin users to hold a trustworthy dollar asset while staying within the ecosystem, turning USDH into an indispensable tool.
It also creates new rails for transaction efficiency particularly artifacted into (most likely) Bitcoin’s L2 network where Stacks is being integrated too. It benefits from Stacks smart contract functionality to enable rapid, secure transactions; thereby connecting Bitcoin’s full security with any DeFi ecosystem programmability.
The Final Thoughts
The $1.7M seed round for Hermetica is a major milestone in the growth of USDH and opens up further opportunities to bring Bitcoin to DeFi, leveraging current market demand. By enabling a smooth transition to its liquidity pools, Mesa aims at establishing itself as an active liquidity hub in the ecosystem and USDH is designed with capital efficiency in mind by leveraging strategic partnerships to augment Bitcoin’s core strengths.
That investor confidence continues to grow around TokenSoft as it raises its seed round more successfully frames the vision of a stable, Bitcoin-backed dollar asset that still offers users financial flexibility without all those downsides. A model such as Hermetica’s could potentially make USDH the first mover, which would allow it to capture a new market and change how BTC holders handle digital assets.
This financing paints a vision for the future of digital assets in which Bitcoin fulfills an entirely new role in the stablecoin ecosystem — not only as store-of-value, but as collateral that offers both stability and decentralization built on top of it; marking inception to uniform asset representation rooted all across Bitcoin financial system.
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