Hermetica Labs Closes $1.7M Seed Funding Round for USDh, the First Bitcoin-Backed, Yield-Generating Synthetic Dollar

The new funds will be used to drive the growth of USDh, issued natively on Bitcoin Layer-1 (L1) via Runes and Layer-2 (L2) through Stacks.

Fintech platform Hermetica, the creator of USDh, a Bitcoin (BTC)-backed synthetic dollar that generates yield, has raised $1.7 million in seed funding, Finbold learned on October 16 from a statement shared with the press.

The funding round was led by UTXO Management and included participation from CMS Holdings, Ethos Fund, Trust Machines SPV, Newman Capital, and Silvermine.

High-profile angel investors in the round included Tycho Onnasch (Zest Protocol), Robin Obermaier (Liquidium), Mithil Thakore (Velar), Matt Maduno (Arch Network), and GM Chung (DeSpread).

The new funds will be used to drive the growth of USDh, which is being issued natively on Bitcoin Layer-1 (L1) via Runes and Layer-2 (L2) through Stacks.

Available on decentralized exchanges (DEX), USDh taps into the flourishing stablecoin market, which has seen over 100% growth year-over-year, reaching more than $160 billion and accounting for half of all on-chain transactions.

Despite an impressive $1.3-trillion market cap, less than 1% of BTC is used in decentralized finance (DeFi), leaving a $1 trillion market for USDh holders to explore.

By creating a stable, liquid dollar asset that can be redeemed for BTC, Hermetica aims to provide BTC holders with a way of holding dollars within the ecosystem securely.

Hermetica Labs CEO Jakob Schillinger said that stablecoins are at the heart of DeFi systems, adding that “USDh is the ideal Bitcoin-backed stablecoin — capital efficient, independent of the fiat system, and yield-generating.”

The Managing Partner at Ethos Fund, Simon Shin, said: “We are excited about Hermetica because they are unlocking significant value within the Bitcoin ecosystem with the creation of USDh. We believe their ability to seamlessly integrate stablecoins into Bitcoin’s Layer 1 and Layer 2 networks presents a massive opportunity. USD will become a fundamental tool for Bitcoin users seeking a reliable dollar asset without leaving the ecosystem.”

The seed funding will help speed up USDh integration across the BTC ecosystem, leading to improved liquidity, institutional custodial partnerships, and scalable off-exchange settlement options.

In other words, Hermetica aims to offer a decentralized, secure alternative to fiat-backed stablecoins by using Bitcoin’s core strengths.