Hermetica, a leading Bitcoin (BTC) stablecoin issuer, has expanded its partnership with Bitcoin Layer 2 (L2) network Stacks (STX)
Hermetica, a leading Bitcoin (BTC) stablecoin issuer, has expanded its partnership with Bitcoin Layer 2 (L2) network Stacks (STX), the company disclosed in an email to Finbold on Thursday, April 17.
The partnership, initially announced in September, saw the issuer bring its synthetic dollar, USDh, onto the network following a $1.7 million seed funding round. USDh is entirely Bitcoin-backed and pegged to the dollar, allowing holders to earn a 25% yield.
The partnership will now see USDh be used for liquidations on Stacks’ lending protocol, Zest. In doing so, Zest hopes to scale sBTC-backed loans, which stand to benefit from Hermetica’s smart contract infrastructure, which can act as a bridge for centralized exchange liquidity toward decentralized finance (DeFi) spaces and, in turn, jumpstart the BTCfi flywheel.
Hermetica’s Chief Executive Officer (CEO), Jakob Schillinger, reflected on the goals and benefits of the integration, stating that:
“USDh is the first and only stablecoin designed to provide liquidity to Bitcoin-native DeFi. By powering Zest’s liquidations with USDh, we’re enabling scalable growth of sBTC-backed loans and establishing USDh as the core liquidity layer for Bitcoin-native finance. No other stablecoin has the infrastructure to deliver liquidity with this level of security and native Bitcoin backing.”
Tycho Onnasch, the CEO of Zest Protocol, further elaborated on the benefits the network will reap, having stated that:
“With native sBTC-to-USDh minting, we can now handle liquidations more easily and scale our sBTC loan offering. Hermetica has delivered a key primitive for real DeFi on Bitcoin, plugging directly into what we’re building at Zest: Stacks DeFi on the Bitcoin standard.”
The partnership also expands the borrowing cap on the Zest Protocol to over $1 million USDh, triple the previous amount.
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