Hermetica has teamed up with Velar to provide a 5% annual yield for traders on the Bitcoin-backed stablecoin USDh through Velar’s futures exchange on Stacks.

Hermetica, the issuer of the Bitcoin-backed stablecoin USDh, has partnered with Velar to offer a 5% annual yield to traders using Velar’s perpetual futures exchange on the Bitcoin Layer 2 network, Stacks (STX), according to a release shared with Coin Insider Daily. 

The new feature allows users to earn yield on USDh while trading leveraged Bitcoin (BTC) positions.

Active collateral 

This marks a shift in how traders can use their collateral. Typically, when traders deposit stablecoins to open leveraged positions on futures platforms, the collateral sits idle. 

Now, users trading on Velar PerpDEX with USDh can earn a weekly yield on that collateral, without needing to stake or lock up their funds elsewhere.

Perpetual futures are a type of crypto derivative that lets traders speculate on the future price of Bitcoin without owning the underlying asset. Traders can go long or short using leverage, amplifying both potential gains and losses. 

Velar PerpDEX brings this kind of trading to Bitcoin’s DeFi ecosystem via the Stacks network, which adds smart contract functionality on top of Bitcoin.

USDh is a synthetic stablecoin pegged to the U.S. dollar and backed by Bitcoin. Unlike most stablecoins, which are backed by traditional fiat reserves, USDh is supported by BTC and designed to earn yield automatically. Hermetica says it is the first stablecoin to offer yield in Bitcoin-native DeFi.

The new integration is designed to make capital use more efficient for traders. It offers a way to earn passive income from stable collateral while actively trading BTC, potentially attracting more users to the still-nascent world of Bitcoin-based DeFi.