$BTC First BTC-backed synthetic dollar to launch with 25% yield

Is the 25% yield of USDh, Bitcoin's first native synthetic dollar with yield generating capabilities, sustainable?

Hermetica has announced the launch of the first Bitcoin-backed synthetic US dollar with yield generating capabilities in the latest development for Bitcoin-native decentralized finance (DeFi).

Scheduled to launch in June, the new synthetic dollar, USDh, will offer users returns of up to 25%, according to Hermetica's announcement shared with Cointelegraph.

The new synthetic dollar will allow Bitcoiners to hold and earn returns on their US dollars without needing to trust the banking system or expose themselves to non-Bitcoin-related products, according to Jakob Schillinger, founder and CEO of Hermetica Labs.

"USDh will play a critical role in bringing greater liquidity and new use cases to Bitcoin DeFi, allowing Bitcoiners to trade, lend and transact in a dollar asset fully backed by Bitcoin."

Hermetica is a Stacks-native DeFi protocol on Bitcoin and part of a broader movement known as Bitcoin DeFi (BTCFi), which aims to bring DeFi capabilities to the world's first blockchain network.

It comes two months after Ethena's USDe launched with a 27.6% return for holders, raising widespread concerns about the protocol's sustainability.

Similar concerns could arise for Hermetica's USDh, as the 25% annual return is considerably higher than the 20% return offered by Anchor Protocol on TerraUSD (UST) before algorithmic stablecoin issuer Terra collapsed in May 22. .

According to the CEO of Hermetica, the performance is sustainable and comes from futures financing rates. Schillinger explained:

"This native Btc yield fluctuates with market demand for long leverage