A novel opportunity has emerged for generating Bitcoin DeFi yield, as Hermetica partners with Velar to introduce a 5% annual return on the Bitcoin-backed stablecoin, USDh.
This yield is available to traders utilizing Velar’s perpetual futures exchange, built on the Bitcoin Layer 2 network, Stacks (STX). According to details released, this collaboration allows users to simultaneously earn yield on their USDh holdings while engaging in leveraged Bitcoin (BTC) trading.
This represents a significant evolution in how trading collateral is utilized. Traditionally, stablecoins deposited on futures platforms to back leveraged positions remain unproductive.
However, Velar PerpDEX users employing USDh can now accrue a weekly yield on their active collateral. This mechanism eliminates the need for separate staking or locking procedures, integrating yield generation directly into the trading workflow.
[Earn 5% USDh yield while trading on @VelarBTC’s PerpDEX!]
Experts note this aligns with a broader trend in decentralized finance (DeFi) seeking greater capital efficiency. Making collateral ‘active’ enhances the appeal of platforms aiming to build robust financial ecosystems on Bitcoin.
Perpetual futures contracts are popular crypto derivatives allowing speculation on Bitcoin’s price movements without direct ownership. They enable leveraged long or short positions, magnifying potential outcomes.
Velar brings this advanced trading instrument to the Bitcoin network via Stacks, a layer that enables smart contract functionality, expanding Bitcoin’s capabilities beyond simple transactions.
USDh itself is distinct; it’s a synthetic stablecoin maintaining a peg to the US dollar but backed by Bitcoin collateral, not traditional fiat reserves. Hermetica highlights USDh as the first stablecoin designed to automatically generate yield within the native Bitcoin DeFi space.
This integration aims to make trading more capital-efficient, offering passive income potential on otherwise idle funds. Such innovations could significantly boost user adoption within the growing landscape of Bitcoin-based DeFi applications.