# Welcome Hermetica develops institutional-grade, Bitcoin-backed yield products, including hBTC and USDh. Visit our [app](https://app.hermetica.fi) to earn Bitcoin yield.
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# Who We Are Our team brings decades of experience from leading crypto and financial institutions, including Kraken, to build Bitcoin finance. {% hint style="success" %} ## Our Mission **At Hermetica, our mission is to enable global financial freedom.** {% endhint %} We believe a decentralized, Bitcoin-powered financial system is a foundational pillar of a prosperous and free society. Hermetica builds open, durable financial infrastructure designed to operate globally and at scale, empowering individuals with resilient financial tools in their pursuit of financial freedom. Read our [full manifesto](https://www.blog.hermetica.fi/p/hermetica-manifesto). #### What’s in a Name? Hermetica takes its name from *Hermes Trismegistus*, the Greek god associated with communication, exchange, mathematics, and technology. Hermes is traditionally understood as a mediator—operating between domains and enabling coordination across otherwise separate systems. The name Hermetica reflects our belief that durable financial systems are built through disciplined design and respect for first principles. Our work bridges Bitcoin with modern financial primitives in a way that is transparent, resilient, and globally accessible. Learn more about [what's in the name *Hermetica*](https://blog.hermetica.fi/p/hermetica-what-is-in-the-name). #### Backed by Hermetica is backed by a group of experienced venture funds and industry founders with deep expertise across Bitcoin, cryptography, and financial infrastructure. Our investors include institutional funds and strategic angels who have helped build and scale foundational crypto protocols, exchanges, and developer ecosystems.
# Overview
**hBTC is Bitcoin that earns Bitcoin** — self-custodial, transparent, and fully redeemable for native Bitcoin. Deposited BTC is deployed into DeFi to generate BTC-denominated yield. The primary strategy is to borrow stablecoin assets against BTC collateral (e.g., borrow USDh on Zest), deploy those assets into yield strategies (e.g., stake USDh on Hermetica), and harvest profits back into BTC. hBTC is a liquid staking token (LST) that accrues yield daily and auto-compounds returns. The core design principles are: * **Self-custodial:** Assets can only move via protocol smart contracts; governance changes are timelocked; no centralized custodians. * **Permissionless withdrawals:** Users can withdraw back to native Bitcoin at any time. * **Full transparency:** All transactions are on-chain and independently verifiable. * **Automated risk controls:** Pre-defined leverage, delta, and interest spread controls with off-chain keepers; no discretionary manual trading. {% hint style="success" %} ## Get Started 1. **Open** the [Hermetica app](https://app.hermetica.fi/) 2. **Connect** a Bitcoin & Stacks wallet, like [Xverse](htps://xverse.app) 3. **Stake** your BTC for hBTC 4. **Earn** daily BTC yield {% endhint %} # How it Works hBTC enables Bitcoin holders to earn **BTC-denominated yield** while retaining self-custody and the ability to redeem for **native Bitcoin**. #### Deposit & Mint Users deposit Bitcoin via the decentralized sBTC bridge and stake sBTC into the hBTC vault. In return, the vault mints **hBTC**, representing a proportional share of pooled assets and strategy exposure. #### Yield Accrual hBTC accrues yield daily through on-chain strategies, including basis capture and Bitcoin-native staking. Yield is automatically compounded and reflected in the **hBTC share price**. All strategy profits are ultimately converted back into Bitcoin. #### Withdraw & Redeem Users may redeem hBTC for sBTC or native Bitcoin, subject to protocol cooldowns and underlying chain settlement times defined by the sBTC bridge. #### Risk Controls & Transparency The protocol employs automated controls for leverage, delta exposure, and interest spread regimes. All material metrics, positions, and transactions are transparently displayed and independently verifiable on-chain. Detailed explanations of capital flows, yield mechanics, risk controls, and accounting are available in the sections below:
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# Flows ## Capital Flows
### 1) Deposit: mint hBTC Users deposit **native** **BTC** or **sBTC** into the vault smart contract and receive **hBTC** based on the current share price. hBTC is a SIP-010 token whose value reflects the vault’s net asset value (NAV) per share. Deposits from BTC take **\~30 min** (3 Bitcoin confirmations). {% hint style="success" %} ### **sBTC** Decentralized Bitcoin Bridge sBTC is a 1:1 BTC-backed asset that enables **permissionless deposit and withdrawal** of Bitcoin into the Stacks ecosystem. It is secured by a **decentralized network of signers**, with deposits and withdrawals requiring a 70% supermajority consensus (10 of 14 signers).\ \ *For additional details, see the* [*sBTC documentation*](https://docs.stacks.co/learn/sbtc)*.* {% endhint %} ### 2) Deploy: generate BTC-denominated yield Deposited BTC (sBTC) is deployed into DeFi to generate BTC-denominated yield. \ \ The primary strategy at launch is to borrow stablecoin assets against sBTC collateral (e.g., borrow USDh on Zest), deploy stablecoins into yield protocols (e.g., stake USDh on Hermetica), and harvest profits back into sBTC via swap. {% hint style="info" %} ## External Integrations At launch, hBTC integrates with the following external smart contracts: 1. **Zest Protocol** – used to borrow against sBTC collateral as part of the vault’s core strategy.\ *For additional details, see the* [*Zest documentation*](https://docs.zestprotocol.com/start/)*.* 2. **Hermetica Protocol** – used for sUSDh yield generation and stablecoin-to-Bitcoin swap execution.\ *For additional details, see the* [*USDh documentation*](https://docs.hermetica.fi/usdh)*.* {% endhint %} ### 3) Account: daily mark-to-market and share price update The vault performs **daily** mark-to-market accounting via a reward logging mechanism, which updates the hBTC share price accordingly. {% hint style="success" %} ## **Reserve Fund** A dedicated **reserve fund** can buffer negative reward periods (subject to capitalization). *For additional details, see the* [*Reserve Fund documentation*](https://docs.hermetica.fi/hbtc/reserve-fund)*.* {% endhint %} ### 4) Withdraw: redeem hBTC to BTC Users may withdraw at any time without lockups. Withdrawals are initiated by returning hBTC to the vault and, after the cooldown period, redeemed for either native BTC or sBTC. An **express** withdrawal path is available in exchange for a fee. Withdrawals to BTC take **\~80 min** (8 Bitcoin confirmations). # Yield Where does hBTC yield come from? #### Yield mechanism hBTC is designed to generate **BTC-denominated yield** by deploying into **on-chain DeFi strategies** and systematically converting all realized profits back into Bitcoin. {% hint style="info" %} Yield is **market-dependent** and may vary over time. {% endhint %} #### Yield sources hBTC may source yield from a range of DeFi primitives, including: * **Basis strategies** * **Lending markets** * **Staking** * **AMM liquidity provision** * **Real-world assets (RWAs)**
#### Launch configuration At launch, hBTC yield is primarily generated from: 1. **Basis strategies**, using **USDh** as the core yield mechanism 2. **Stacks Dual Stacking**, leveraging Stacks Proof-of-Transfer (PoX) consensus mechanism Additional strategies may be introduced over time as the protocol expands. #### Strategy governance and expansion Hermetica continuously evaluates additional on-chain yield opportunities across DeFi. New strategies are introduced only after completing **technical diligence and risk review**. {% hint style="info" %} Any strategy changes are **announced in advance** and take effect only after the **governance timelock** has elapsed. {% endhint %} # Basis The basis strategy maintains a delta-neutral position by holding spot Bitcoin while simultaneously shorting Bitcoin perpetual futures.
Yield is generated from periodic funding payments paid by perpetual futures traders, which accrue to the strategy. {% hint style="info" %} *For additional details, see the* [*USDh yield mechanism documentation*](/usdh/how-it-works/yield)*.* {% endhint %} Hermetica’s liquid yield token, sUSDh, accrues daily yield from funding rate payments sourced from Binance, Bybit, OKX, and Bitget.\ \ Protocol backing assets are custodied with Copper and Ceffu and mirrored to exchanges via off-exchange settlement solutions (ClearLoop and MirrorX). Assets custodied with Copper are held in a bankruptcy-remote English trust structure. Only **mainnet BTC** is used as collateral asset. {% hint style="success" %} ## Custodian Attestations The protocol publishes monthly custodian attestations detailing backing assets and publicly verifiable liabilities. *For additional details, see the* [*USDh backing mechanism documentation*](/usdh/how-it-works/backing)*.* {% endhint %} {% hint style="info" %} ## Transparency Dashboards The protocol transparency dashboard provides near real-time visibility into system backing, venue allocation, reserve fund status, and historical performance. *For additional details, see the* [*USDh transparency dashboards*.](https://app.hermetica.fi/dashboard) {% endhint %} # Staking Stacks Dual Stacking allows participants to earn **Bitcoin-denominated rewards** through **Proof-of-Transfer (PoX)**, the consensus mechanism that secures the Stacks network. Bitcoin committed to Dual Stacking accrues BTC rewards, which may be enhanced by holding STX or by deploying BTC within the Stacks DeFi ecosystem. {% hint style="success" %} hBTC qualifies for the **maximum 10x Dual Stacking reward tier** by deploying into DeFi. {% endhint %} Proof-of-Transfer rewards have been active since 2021, with **over 3,740 BTC distributed** to participants since inception.
Dual Stacking rewards are distributed to the vault contracts on a bi-weekly basis and are smoothed into the vault’s daily NAV through prorated accounting (1/14 per day). All sBTC rewards are redeployed into active DeFi strategies and automatically compounded. Historically, base Dual Stacking rewards have ranged between 0.3%–0.5% APY. By qualifying for the maximum 10x Dual Stacking tier, hBTC benefits from an enhanced reward rate, historically equivalent to approximately **3%–5% APY**. {% hint style="info" %} *For additional details, see the* [*Stacks Dual Stacking documentation*](https://docs.stacks.co/learn/dual-stacking)*.* {% endhint %} {% hint style="info" %} *Note: Past performance is not indicative of future results.* {% endhint %} # Liquidity This page outlines expected **time-to-liquidity** across protocol cooldowns and chain settlement. #### No lockups hBTC has **no lockup period**. Users may initiate a withdrawal at any time, subject only to the applicable **protocol cooldown** and **chain settlement timing**. #### Withdrawal cooldown * **Standard:** **72 hours** * **Express:** **4 hours** *(express fee applies; see* [*Fees*](/hbtc/fees)*)* {% hint style="info" %} Express withdrawals are capped at **2.5% of net asset value** within any 24-hour period. {% endhint %} #### On-chain settlement targets * **Deposit: \~30 minutes** (3 Bitcoin confirmations) * **Withdraw**: **\~80 minutes** (8 Bitcoin confirm {% hint style="warning" %} Confirmation times are targets and can vary with network conditions. {% endhint %} {% hint style="info" %} Settlement targets are defined by the sBTC bridge, not the protocol. {% endhint %} # Risk Controls ### Risk framework hBTC is designed to operate within a **pre-defined, rules-based risk framework**. Risk management is automated and parameter-driven; the protocol does not rely on discretionary trading decisions. All risk controls are observable, threshold-based, and enforced through systematic mechanisms. The primary risk control domains are **leverage**, **delta exposure**, and **interest spreads**, supported by a dedicated **reserve fund**.
#### 1) Leverage Control **Objective**\ Maintain a healthy money market position and reduce liquidation risk by operating within conservative Loan-to-Value (LTV) bounds. **Current Thresholds** * **Cap:** 51% * **Target:** 50% * **Floor:** 49% **Mechanism**\ An automated off-chain service continuously monitors LTV and adjusts positions by opening or closing exposure when thresholds are breached, rebalancing toward the target. {% hint style="info" %} ## Liquidation Parameters **Zest protocol's** current liquidation parameters: * **Liquidation threshold**: * Paritial: 70% LTV * Full: 75% LTV * **Liquidation penalty**: 5-10% {% endhint %} {% hint style="warning" %} If liquidation were to occur, the protocol may incur losses up to or exceeding the liquidation penalty, depending on market conditions and execution dynamics.\ \ *For additional details, see the* [*Market Risk disclosures*](/hbtc/risk-disclosures/market-risk)*.* {% endhint %} #### 2) Delta Control **Objective**\ Maintain BTC exposure within a tightly defined delta-neutral range to minimize directional risk. **Current Thresholds** * **Cap:** 1.001 * **Target:** 1.0000 * **Floor:** 0.999 **Mechanism**\ When delta thresholds are breached, the protocol rebalances exposure via **Hermetica mint and redeem swaps** between stablecoins and sBTC, restoring exposure toward the target. #### 3) Interest Spread Control **Objective**\ Manage strategy exposure based on observed interest spread regimes, reducing or exiting positions when spreads become persistently unfavorable. **Current Thresholds** * **Maximum negative spread:** 2 consecutive days of negative spread * **Redeploy criteria:** 2 consecutive days of positive spread **Mechanism**\ When negative spread threshold is breached, positions are closed or reduced. Strategy deployment resumes only after redeploy criteria are met. #### 4) Reserve Fund **Objective**\ Maintain a dedicated reserve fund that to buffer negative reward periods, subject to available capitalization. **Current Thresholds** * **Reserve rate:** 5% of daily rewards * **Minimum reserve capitalization:** 10 bps * **Redeploy criteria:** 2 consecutive days of positive spread **Mechanism**\ A defined portion of daily rewards (the reserve rate) is allocated to the reserve fund. If capitalization threshold is breached, positions are closed or reduced. Strategy deployment resumes only after redeploy criteria are met. {% hint style="info" %} The reserve fund is designed as a risk mitigation mechanism, **not as a guarantee against loss.** *For additional details, see the* [*Reserve Fund documentation*](/hbtc/reserve-fund)*.* {% endhint %} # Accounting This section describes the accounting framework used by the hBTC vault, including NAV calculation, income recognition, and compounding mechanics. #### Share Price Updates The vault performs **daily accrual and valuation**, with rewards logged once per day. At each daily valuation: * All assets and liabilities are marked to market * Accrued strategy income and financing costs are recognized * Net assets are recalculated * Rewards are logged * The hBTC share price updates accordingly {% hint style="info" %} Daily NAV movements **may be positive or negative** depending on market conditions and strategy performance. {% endhint %} #### BTC Denomination Strategy profits typically accrue in stablecoins within the vault as a result of borrowing and yield generation. However, all performance is accounted for and delivered in Bitcoin terms. To align realized income with BTC-denominated NAV reporting, the vault periodically converts stablecoin profits into Bitcoin (sBTC). This harvesting process is integrated into the protocol's [Delta Control framework](/hbtc/how-it-works/risk-controls#id-2-delta-control) and ensures that realized gains are reflected in BTC exposure. #### Compounding and Reinvestment All realized income is retained within the vault and **automatically reinvested**, resulting in continuous compounding. This reinvestment is reflected directly in the hBTC share price. # Governance The hBTC protocol employs a role-based governance model with clearly scoped permissions to separate strategic control, operational execution, and risk oversight.
### Roles #### Owner The **Owner** is the highest authority within the protocol and is responsible for assigning and managing all other roles. The Owner has the ability to modify critical protocol settings, subject to timelock constraints as well as day-to-day protocol configuration without timelock. {% hint style="success" %} The Owner role is secured by a **3-of-6** multi-signature wallet. {% endhint %} #### Guardian A **Guardian** role provides emergency risk controls, enabling protective actions such as pausing protocol functionality. #### Operator Operators are specialized operational roles who execute predefined functions within strict boundaries. * **Trader:** Executes strategy-related transactions (e.g., borrow, stake, swap) * **Manager:** Manages funding of withdrawal claims * **Rewarder:** Performs reward logging accounting updates * **Fee Setter**: Can set custom exit fee {% hint style="success" %} All role changes are **timelocked**. {% endhint %}
Active Roles Owner: [SM1QXYXZG78DCWJZJKY0901KTK3350071W9YYRPMT](https://explorer.hiro.so/address/SM1QXYXZG78DCWJZJKY0901KTK3350071W9YYRPMT?chain=mainnet) (3/6 multi-sig) Guardian: [SM1QXYXZG78DCWJZJKY0901KTK3350071W9YYRPMT](https://explorer.hiro.so/address/SM1QXYXZG78DCWJZJKY0901KTK3350071W9YYRPMT?chain=mainnet) (3/6 multi-sig) Trader: [SP20V8SG811G6CT2QMZQNX6XCN20YAX36DYD1BAE0](https://explorer.hiro.so/address/SP20V8SG811G6CT2QMZQNX6XCN20YAX36DYD1BAE0?chain=mainnet) Rewarder: [SP20V8SG811G6CT2QMZQNX6XCN20YAX36DYD1BAE0](https://explorer.hiro.so/address/SP20V8SG811G6CT2QMZQNX6XCN20YAX36DYD1BAE0?chain=mainnet) Manager: [SP20V8SG811G6CT2QMZQNX6XCN20YAX36DYD1BAE0](https://explorer.hiro.so/address/SP20V8SG811G6CT2QMZQNX6XCN20YAX36DYD1BAE0?chain=mainnet) Fee Setter: None
### Settings #### Protocol Defines the set of core protocol smart contracts with the ability to invoke internal contracts, move assets within the system, and execute approved external contract calls. #### Assets Specifies the assets that protocol smart contracts are authorized to custody, transfer, and deploy as part of strategy execution. #### Externals Defines the external smart contracts that the system is permitted to interact with, including money markets, yield protocols, and swap interfaces. {% hint style="success" %} All security-sensitive setting updates are **timelocked**. {% endhint %}
Active Settings Protocol * See [Smart Contracts](https://docs.hermetica.fi/hbtc/how-it-works/smart-contracts#smart-contracts) Assets * [sBTC](https://explorer.hiro.so/token/SM3VDXK3WZZSA84XXFKAFAF15NNZX32CTSG82JFQ4.sbtc-token?chain=mainnet) * [USDh](https://explorer.hiro.so/token/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.usdh-token-v1?chain=mainnet) * [sUSDh](https://explorer.hiro.so/token/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.susdh-token-v1?chain=mainnet) Externals * Zest Protocol * [market-v0-3](https://explorer.hiro.so/txid/SP1A27KFY4XERQCCRCARCYD1CC5N7M6688BSYADJ7.v0-3-market?chain=mainnet) * [sBTC vault-v0-1](https://explorer.hiro.so/txid/SP1A27KFY4XERQCCRCARCYD1CC5N7M6688BSYADJ7.vault-sbtc?chain=mainnet) * [USDh vault-v0-1](https://explorer.hiro.so/txid/SP1A27KFY4XERQCCRCARCYD1CC5N7M6688BSYADJ7.vault-usdh?chain=mainnet) * Hermetica USDh Protocol * [staking-v1-1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.staking-v1-1?chain=mainnet) * [staking-silo-v1-1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.staking-silo-v1-1?chain=mainnet) * [minting-auto-v1-2](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.minting-auto-v1-2?chain=mainnet)
### Timelock All critical protocol changes—including role assignments and security-sensitive parameter updates—are subject to a **governance timelock**. The current timelock period is **24 hours.** ### Emergency Control In case of a owner compromise (worst case scenario) the emergency mechanism freezes the protocol and allows for the safe withdrawal of assets. # Smart Contracts The hBTC protocol is organized into several smart contract domains covering governance, user interaction, trading, and accounting. Governance contracts manage permissions, configuration, and safety controls; user-facing contracts handle deposits, withdrawals, and the hBTC token; trading contracts interface with external protocols for strategy execution; and accounting contracts manage NAV updates and the reserve fund. All assets are held within a dedicated reserve contract, providing a single, auditable asset layer across the system.
hBTC smart contracts are open-source and verifiable on-chain.
Smart Contracts HQ: [SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.hq-v1](https://explorer.hiro.so/txid/SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.hq-v1?chain=mainnet) State: [SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.state-hbtc-v1](https://explorer.hiro.so/txid/SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.state-hbtc-v1?chain=mainnet) Blacklist: [SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.blacklist-v1](https://explorer.hiro.so/txid/SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.blacklist-v1?chain=mainnet) Vault: [SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.vault-hbtc-v1](https://explorer.hiro.so/txid/SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.vault-hbtc-v1?chain=mainnet) Token: [SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.token-hbtc](https://explorer.hiro.so/txid/SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.token-hbtc?chain=mainnet) Reserve: [SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.reserve-hbtc-v1](https://explorer.hiro.so/txid/SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.reserve-hbtc-v1?chain=mainnet) Trading: [SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.trading-hbtc-v1](https://explorer.hiro.so/txid/SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.trading-hbtc-v1?chain=mainnet) Zest Interface: [SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.zest-interface-hbtc-v1](https://explorer.hiro.so/txid/SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.zest-interface-hbtc-v1?chain=mainnet) Hermetica Interface: [SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.hermetica-interface-hbtc-v1](https://explorer.hiro.so/txid/SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.hermetica-interface-hbtc-v1?chain=mainnet) Controller: [SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.controller-hbtc-v1](https://explorer.hiro.so/txid/SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.controller-hbtc-v1?chain=mainnet) Reserve Fund: [SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.reserve-fund-hbtc-v1](https://explorer.hiro.so/txid/SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.reserve-fund-hbtc-v1?chain=mainnet)
{% hint style="success" %} View the hBTC smart contracts [on Github](https://github.com/hermetica-fi/hermetica-contracts). {% endhint %} # Transparency Material risk factors and system metrics for hBTC are displayed in the [**Transparency Dashboard**](https://app.hermetica.fi/dashboard) and are i**ndependently verifiable on-chain**. {% hint style="success" %} ## Independent Verification All data presented in the Transparency Dashboard can be independently verified and reconstructed using public blockchain infrastructure, including [**mempool.space**](https://mempool.space/) for Bitcoin activity and [**Hiro’s Stacks block explorer**](https://explorer.stacks.co/) **and** [**APIs**](https://www.hiro.so/stacks-api) for Stacks-based transactions and contract state. Dashboard metrics are derived directly from on-chain state and are updated on a near real-time basis, subject only to underlying blockchain confirmation times. {% endhint %} {% hint style="info" %} **Disclaimer:** While the Transparency Dashboard displays material risk factors and system metrics, it may not capture all risks associated with hBTC. {% endhint %} #### Leverage The dashboard displays current and historical **loan-to-value (LTV)** metrics, including target ranges and threshold bands. This allows to monitor leverage discipline and proximity to liquidation risk in real time.
#### Delta BTC exposure is tracked through delta metrics, showing how closely the vault maintains its target neutral exposure. Deviations and rebalancing behavior are observable through on-chain activity.
#### Rewards Daily rewards are logged transparently, showing **BTC-denominated returns**, implied APY, and corresponding transaction IDs. Both positive and negative days are explicitly displayed, supporting accurate performance assessment.
#### Balance Sheet A live **balance sheet view** shows assets, liabilities, and collateral allocation. This provides a snapshot of the vault’s financial position at any given time.
#### Transactions All protocol actions—including borrows, repayments, staking, and swaps—are listed with timestamps and links to on-chain transaction records, enabling full auditability.
# Reserve Fund The **Reserve Fund** is designed to buffer short-term negative reward periods and mitigate the impact of adverse market conditions. It serves as a risk management mechanism rather than a guarantee against loss. #### Capitalization A defined portion of daily rewards (the reserve rate) is allocated to the Reserve Fund. {% hint style="info" %} The current reserve rate is **5% of daily rewards**. {% endhint %} The protocol targets a **minimum reserve capitalization of 10 basis points (bps) of net assets**. If reserve capitalization falls below the minimum threshold, strategy exposure is reduced or positions are closed in a systematic manner. Strategy deployment resumes only after predefined redeploy criteria are met, ensuring disciplined re-entry following adverse conditions. #### Accounting Treatment Assets held in the Reserve Fund are **not included as vault assets for NAV purposes**; as a result, reserve balances effectively provide **overcollateralization** relative to hBTC liabilities. {% hint style="success" %} #### Transparency and Verification The Reserve Fund is implemented as a dedicated on-chain contract and can be independently verified using the [**Stacks block explorer**](https://explorer.hiro.so/txid/SP1S1HSFH0SQQGWKB69EYFNY0B1MHRMGXR3J1FH4D.reserve-fund-hbtc-v1?chain=mainnet). {% endhint %} # Audits The security and integrity of the hBTC smart contracts are supported by comprehensive audits conducted by experienced third-party security firms. These audits are designed to assess protocol architecture, identify potential vulnerabilities, and validate core contract logic prior to deployment and ongoing upgrades. ## Reports ### Clarity Alliance Audit {% file src="/files/ES2XtoFKFniEbbTXsGct" %} {% hint style="info" %} Verify the report on the [*Clarity Alliance website*](https://www.clarityalliance.org/reports/hermetica-vaults). {% endhint %} ### Greybeard Security Audit {% file src="/files/vYlUUHFRAG4C3XuiiuLe" %} {% hint style="info" %} Verify the report in the [*Grebeard Security Github repo*](https://github.com/greybeard-security/audit-reports). {% endhint %} # Fees * **Performance fee:** 10% of all yield * **Management fee:** 0% * **Deposit fee:** 0% * **Withdraw fee** * **Standard:** 0% * **Express:** 0.5% {% hint style="info" %} Any fee changes are **announced in advance** and only take effect after the governance **timelock** has elapsed. {% endhint %} # Risk Disclosures This section outlines the **principal risks** associated with hBTC to support informed evaluation. While the protocol is designed with systematic risk controls and transparency, participation involves exposure to infrastructure, smart contract, economic, operational, and general risks, which should be carefully reviewed prior to deployment of capital. {% content-ref url="/pages/WtHhzwXa11oFH6zKBI8M" %} [Infrastructure Risk](/hbtc/risk-disclosures/infrastructure-risk) {% endcontent-ref %} {% content-ref url="/pages/ZfgGa908DKoVvEUT6e5M" %} [Smart Contract Risk](/hbtc/risk-disclosures/smart-contract-risk) {% endcontent-ref %} {% content-ref url="/pages/pjVxGPKEU4rYJXXMdRJq" %} [Counterparty Risk](/hbtc/risk-disclosures/counterparty-risk) {% endcontent-ref %} {% content-ref url="/pages/F0TZy778tdHrEFjrFhzj" %} [Market Risk](/hbtc/risk-disclosures/market-risk) {% endcontent-ref %} {% content-ref url="/pages/MR9TZPUtw5qkNyfQRUov" %} [Operational Risk](/hbtc/risk-disclosures/operational-risk) {% endcontent-ref %} {% content-ref url="/pages/U6n3BtRWHs6uVknQpvRO" %} [General Risk](/hbtc/risk-disclosures/general-risk) {% endcontent-ref %} # Infrastructure Risk hBTC relies on multiple underlying blockchain and protocol infrastructures, including **Bitcoin**, **Stacks**, **Clarity-based smart contracts**, and the **sBTC decentralized bridge**. The proper functioning of these systems is critical to protocol operation. Key infrastructure risks include: * **Blockchain liveness and availability:** Disruptions to Bitcoin or Stacks block production, finality, or network availability could delay deposits, withdrawals, reward processing, or other protocol operations. * **Network congestion:** Periods of elevated transaction volume on Bitcoin or Stacks may result in increased confirmation times and higher transaction costs, affecting settlement timelines and user experience. * **Consensus failures:** Failures or instability in underlying consensus mechanisms (e.g., Bitcoin consensus or Stacks’ Proof-of-Transfer) could impact transaction ordering, finality, or contract execution. * **Bridge and cross-chain infrastructure risk:** hBTC depends on the sBTC decentralized bridge to move Bitcoin between Bitcoin L1 and Stacks. Failures, delays, or security incidents affecting the bridge or its signer network could impair minting, redemption, or asset availability. While these infrastructures are designed for robustness and decentralization, they are external dependencies and may experience outages, performance degradation, or unforeseen failure modes beyond the control of the hBTC protocol. # Smart Contract Risk hBTC is implemented through a set of **Clarity smart contracts** deployed on the Stacks blockchain. The core vault architecture follows a **simple, ERC-4626–style vault design**, where user deposits mint proportional shares and withdrawals redeem assets based on net asset value. Despite this conservative design approach, smart contract risk remains inherent and includes: * **Code vulnerabilities:** Undiscovered bugs, logic errors, or edge cases in hBTC smart contracts could result in unexpected behavior, loss of funds, or incorrect accounting. * **Integration risk:** hBTC interacts with external smart contracts (e.g., money markets, yield protocols). Vulnerabilities or failures in integrated contracts may adversely affect protocol operation. * **Upgrade and configuration risk:** Although governance controls and timelocks are in place, contract upgrades or parameter changes may introduce new risks or unintended consequences. * **Execution risk:** Smart contracts operate deterministically based on on-chain inputs; oracle failures, unexpected state transitions, or extreme market conditions could impact execution outcomes. {% hint style="success" %} To mitigate these risks, hBTC smart contracts have undergone **multiple independent security audits** conducted by experienced third-party firms. *For additional details, see the* [*Audits documenatation*](/hbtc/audits)*.* {% endhint %} {% hint style="info" %} While audits and conservative design reduce risk, they do not eliminate the possibility of unforeseen vulnerabilities or failures. {% endhint %} # Counterparty Risk hBTC relies on **external protocols and infrastructure outside the control of Hermetica**. These counterparties are critical to strategy execution and asset movement and introduce risks that may affect protocol performance or asset availability. {% hint style="info" %} While Hermetica conducts technical diligence and ongoing monitoring of counterparties, reliance on external protocols inherently exposes the system to risks beyond Hermetica’s direct control. {% endhint %} #### Zest Protocol hBTC integrates with the **Zest Protocol** to access money market infrastructure for **collateralized lending against sBTC**. Risks associated with reliance on Zest include: * **Protocol risk:** Vulnerabilities, design flaws, or economic failures within Zest could result in loss of funds, impaired liquidity, or forced position unwinds. * **Liquidation and oracle risk:** Adverse price movements, oracle failures, or parameter changes may increase liquidation risk or affect borrowing conditions. * **Governance and upgrade risk:** Changes to Zest’s contracts, risk parameters, or governance decisions may impact hBTC strategy execution. * **Operational dependency:** Downtime, degraded performance, or paused functionality could disrupt protocol operations. The Zest Protocol is governed independently and introduces risks that are external to Hermetica. Additional information on Zest is available at: * **Website:** * **Documentation:** #### sBTC Decentralized Bridge hBTC also depends on the **sBTC decentralized bridge** to enable the movement of Bitcoin between Bitcoin L1 and the Stacks ecosystem. Risks associated with the sBTC bridge include: * **Bridge security risk:** Failures, vulnerabilities, or signer coordination issues could impair minting or redemption of sBTC. * **Cross-chain dependency:** Delays or disruptions in Bitcoin or Stacks network operations may affect bridge functionality. * **Governance and operational risk:** Changes to bridge parameters, signer sets, or operational processes may impact availability or performance. The sBTC bridge is governed independently and introduces risks that are external to Hermetica. Additional information on sBTC is available at: * **Website:** [https://www.stacks.co/sbtc](https://www.stacks.co/sbtc?utm_source=chatgpt.com) * **Documentation:** [https://docs.stacks.co/learn/sbtc](https://docs.stacks.co/learn/sbtc?utm_source=chatgpt.com) # Market Risk hBTC employs on-chain strategies that involve borrowing, yield generation, and exposure to market-driven variables. Strategy performance is therefore subject to **market conditions, funding dynamics, liquidity availability, and protocol-specific parameters**, all of which may change unpredictably over time. Market dislocations, rapid price movements, shifts in interest and funding rates, or changes in on-chain liquidity conditions may adversely affect returns and increase risk, including during periods of elevated volatility or stress. {% hint style="info" %} While the protocol is designed to manage risk systematically, **strategy and market risks cannot be fully eliminated**, and adverse conditions may result in reduced returns or losses. {% endhint %} #### Spread Risk hBTC strategies are exposed to **interest spread risk**, where realized yield may become insufficient relative to financing (borrow) costs. Sustained periods of unfavorable spreads may reduce returns or necessitate partial or full position closures to limit losses. **Mitigation:**\ The protocol employs [**Interest Spread Control**](https://docs.hermetica.fi/hbtc/how-it-works/risk-controls#id-3-interest-spread-control) mechanisms to monitor spread regimes and reduce or exit exposure during persistently negative conditions. A dedicated **Reserve Fund** is maintained to buffer short-term adverse periods, subject to available capitalization. #### Liquidation Risk Strategies that utilize money markets introduce **liquidation risk**, particularly during periods of sharp price movements, market stress, or oracle failures. While leverage controls are designed to reduce this risk, they cannot fully eliminate tail risk under extreme market conditions. **Mitigation:**\ The protocol employs [**Leverage Control**](https://docs.hermetica.fi/hbtc/how-it-works/risk-controls#id-1-leverage-control) mechanisms to continuously monitor and manage leverage exposure; with multiple fallback and alert systems to respond to rapidly changing conditions. # Operational Risk hBTC relies on a combination of on-chain smart contracts and off-chain keeper systems to monitor risk parameters, execute rebalancing actions, and perform accounting functions. As a result, the protocol is exposed to **operational risks** that may affect performance or availability. Key operational risks include: * **Off-chain service dependency:** Certain risk controls and strategy operations rely on off-chain services (e.g., keepers) to monitor conditions and submit transactions. Failures, delays, or misconfigurations could impair timely execution. * **Cloud infrastructure availability:** Off-chain services depend on third-party cloud infrastructure providers (e.g., AWS or similar). Outages, service degradation, or network disruptions affecting these providers could impact monitoring, execution, or responsiveness. * **Key management risk:** Operational roles require private key management; compromise, loss, or misuse of keys could disrupt protocol operations or trigger emergency controls. * **Human error:** Configuration mistakes, incorrect parameter updates, or operational oversights may result in unintended behavior or degraded performance. * **Monitoring and alerting failures:** Breakdowns in monitoring, alerting, or response processes could delay detection of adverse conditions. **Mitigation:**\ Operational roles are narrowly scoped, governed by explicit permissions, and subject to governance controls and timelocks. Automated monitoring, fallback mechanisms, and emergency controls (including protocol pause and unwind functionality) are in place to reduce the impact of operational failures. {% hint style="info" %} Despite these controls, operational risks cannot be fully eliminated, and adverse events may result in delayed actions, reduced performance, or temporary disruption of protocol activity. {% endhint %} # General Risk This documentation provides an overview of the hBTC protocol and its associated risks for informational purposes only. It does not constitute investment, legal, or tax advice, nor does it assess the suitability of hBTC for any particular investor. Participation in hBTC involves exposure to crypto-asset markets, smart contract systems, and decentralized financial infrastructure, all of which carry inherent risks. The specific risk categories described in this documentation are not exhaustive, and additional risks may arise due to market conditions, technological developments, regulatory changes, or unforeseen events. Prospective participants should conduct their own independent analysis, including legal, tax, accounting, and risk assessments, before deploying capital. {% hint style="info" %} A comprehensive [**Risk Disclosure Statement**](/resources/legal/risk-disclosure), including general crypto-asset risks and legal disclaimers, is provided separately and should be reviewed in conjunction with this documentation. {% endhint %} # Overview
**USDh:** The first **Bitcoin-backed synthetic dollar** that yields up to **15%**. Until now, the Bitcoin ecosystem lacked an essential building block  -  a dollar asset that is fully backed by Bitcoin, yield-bearing, and native to Bitcoin L1 and L2s. Hermetica’s USDh accomplishes all the above and finally brings the ideal synthetic dollar to the Bitcoin ecosystem. USDh lets you hold dollars and earn yield without leaving Bitcoin. No banks, no fiat — just Bitcoin. #### Get Started 1\). Buy USDh - Available on Bitcoin exchanges ([Magic Eden](https://magiceden.io/runes/USDH%E2%80%A2USDH%E2%80%A2USDH%E2%80%A2USDH), [DotSwap](https://www.dotswap.app/swap#R_BTC_USDH%E2%80%A2USDH%E2%80%A2USDH%E2%80%A2USDH), [Velar](https://app.velar.com/swap?fromtoken=USDh), [Bitflow](https://app.bitflow.finance/trade?x=USDh))\ \ 2\). Stake for up to 15% APY - Stake USDh on [hermetica.fi](https://app.hermetica.fi/stake) and start earning\ \ 3\) Use in Bitcoin DeFi - Trade, lend, and earn additional yield {% content-ref url="/pages/Kv5RCPs4flkXfkh1Vycc" %} [How it Works](/usdh/how-it-works) {% endcontent-ref %} # How it Works The USDh ecosystem is made up of two assets: #### 1. USDh A stablecoin consisting of Bitcoin coupled with a short perpetual futures position. When Hermetica hedges Bitcoin with a short perpetual futures position, it creates a position that is price-stable in dollar terms. {% embed url="" %} #### 2. sUSDh A Bitcoin-native bond that generates up to 15% yield from funding rates. {% embed url="" %} {% hint style="info" %} For more information on yield, please refer to the [Yield Mechanism section](/usdh/how-it-works/yield). {% endhint %} *** USDh and sUSDh are issued natively on Bitcoin L1 via Runes and Bitcoin L2 via Stacks. You can buy USDh on the open market via common crypto marketplaces. [Click here](https://app.hermetica.fi/buy) to get started. More markets and product integrations are coming soon. To access the yield, users [stake USDh](https://app.hermetica.fi/stake) and immediately receive the yield-bearing token, sUSDh.
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# Mint ## Overview **Minting USDh** is the process of creating new stablecoins, while **redeeming USDh** is the process of exchanging these stablecoins for USDC or USDT. ## How USDh is Created USDh is minted directly through Hermetica. It is issued on Bitcoin Layer 1 through Runes and Bitcoin Layer 2 through Stacks. Any registered business or individual in an approved jurisdiction who has completed Hermetica's KYC and AML processes can mint USDh by depositing USDC or USDT. {% hint style="success" %} Other users can purchase USDh through open DeFi markets without completing KYC/KYB. {% endhint %} ## Infrastructure

Overall Process of USDh

All Bitcoin in the protocol is held at institutional-grade custodians [Copper](https://copper.co/) and [Ceffu](https://www.ceffu.com/). Their off-exchange settlement (OES) solutions allow Hermetica to mirror funds onto the centralized exchanges trading venues, while holding our assets in a bankruptcy remote Trust off of the exchange's balance sheet. Hermetica trades on the 4 biggest centralized futures exchanges which represent a total of over $20B in BTCUSD perp open interest. These exchanges are: 1. [Binance](https://www.binance.com) 2. [ByBit](https://www.bybit.com) 3. [Bitget](https://www.bitget.com/) 4. [OKX](https://www.okx.com) The short perpetual futures position delta-hedges the BTC in the protocol and locks in the dollar value, which is in turn represented on-chain as USDh. {% hint style="info" %} While we currently use the exchanges listed above, we are always exploring new exchange partners to further diversify our dependencies. {% endhint %} {% hint style="success" %} For more information about our use of institutional custodians and OES providers, please refer to the [Security Mechanisms section](/usdh/how-it-works/security). {% endhint %} ## Redemptions Approved Participants may redeem USDh for USDC or USDT via a redemption process that mirrors the minting flow in reverse. Redemptions may be temporarily paused if one or more of the following conditions are met: 1. **Derivative venue disruption:** Material downtime, halted trading, or impaired settlement on the venues used for hedging that prevents safe unwind or rebalance. 2. **Liquidity dislocation:** Bid–ask spreads or available depth deteriorate to a level where forced unwinds would cause outsized slippage and realized losses for remaining holders. 3. **Collateral or oracle integrity issues:** Loss of reliable price feeds or custody-layer issues that prevent accurate valuation. 4. **Extreme volatility events:** Volatility spikes that cause margin requirements or execution risk to exceed predefined safety thresholds. 5. **Smart contract or security incidents:** Any credible exploit, vulnerability, or abnormal behavior requiring containment. # Security ## Off-Exchange Settlement #### Overview Hermetica can scale USDh to $5b+ in TVL (at current Open Interest (OI)) because it can tap into Centralized Finance (CeFi) perpetual futures liquidity in a trust-minimized way. Historically, centralized exchanges have been vulnerable to hacks and sudden bankruptcies. Therefore, it's crucial to mitigate the counterparty risks associated with trading on these platforms. #### Infrastructure When users deposit collateral to mint USDh, the funds are moved directly to top-tier, institutional-grade, fully licensed Off-Exchange Settlement (OES) custodians. This ensures that users' collateral is never held by a single party or directly on an exchange. Our OES custodians allow us to mirror funds to centralized exchanges for trading purposes without requiring the funds to be held directly on the exchange. This design means collateral can be recovered by Hermetica in the event of an exchange outage, hack, or other failure. The only funds exposed to the exchange are any unsettled Profit and Loss (PnL) from open positions. Regular settlements and diversification across the five major derivatives trading venues ensure this PnL remains small. In the event of an exchange failure, Hermetica would only lose unsettled PnL from open positions while the bulk of the collateral remains secure in custody wallets. Additionally, Hermetica cannot singlehandedly control funds. The protocol employs institutional-grade custodians like Copper and Ceffu to securely store all collateral, leveraging Multi-Party Computation (MPC) wallets to eliminate single points of failure. These custodians have maintained a perfect track record with no hacks or loss of customer funds since their inception. The collateral is safeguarded within a bankruptcy-remote trust for the entire lifecycle of USDh. The custodian’s infrastructure involves a 2-of-3 multi-signer schema, where Hermetica Labs, the custodian, and a third party hold a key. Hermetica’s key is protected with a 4-of-8 multi-approver scheme. {% hint style="info" %} Our current OES providers are [Copper](https://copper.co/) and [Ceffu](https://www.ceffu.com/). In the future we plan to add more custodians to further diversify our dependencies. {% endhint %} ## Audits Hermetica is dedicated to developing highly secure and professionally audited smart contract infrastructure. To this end, we conduct regular comprehensive security audits with independent third-party services like [Clarity Alliance](https://github.com/Clarity-Alliance/audits/blob/main/Clarity%20Alliance%20-%20Hermetica.pdf) and [Strata Labs](https://drive.google.com/file/d/1uq7weWjH2_nQr8fyqLvbQ7GR8Bhps4Hz/view). Hermetica ensures that its infrastructure remains resilient against an evolving security threat landscape. Review the completed audit reports from [Clarity Alliance](https://github.com/Clarity-Alliance/audits/blob/main/Clarity%20Alliance%20-%20Hermetica.pdf) and [Strata Labs](https://drive.google.com/file/d/1uq7weWjH2_nQr8fyqLvbQ7GR8Bhps4Hz/view) for more information on Hermetica's security audits. # Stability How do we maintain the peg? ## Overview Maintaining stability of the USD peg is crucial for the success of any stablecoin. The price of USDh, like any other asset, is determined by market supply and demand. Depegging occurs when there’s an imbalance between buyers and sellers. ## Peg Maintenance Since Approved Participants (APs) can mint and redeem USDh for one USD from the protocol, they are incentivized to arbitrage any imbalance and bring the USDh price back in line with the peg. A hypothetical example: If there are too many sellers and the price of USDh drops below its $1 peg, APs can buy the token at a discount and then immediately redeem $1 worth of assets from the protocol for profit. If USDh trades above its $1 peg, APs can mint USDh for $1 and sell it into the market for an immediate profit. As long as the protocol's assets meet or exceed the liabilities, the system can effectively maintain the peg. ## Risk Management System The USDh protocol maintains its USD peg by ensuring that USDh liabilities never exceed the dollar value of the Bitcoin assets in the protocol. This is accomplished by maintaining a short perpetual futures position that fully hedges the BTC, removing any BTCUSD price exposure. An operational failure may lead to a mismatch between assets and futures positions and a potential value loss for USDh. To minimize this possibility, our risk engine runs checks every 100 milliseconds and reconciles our liabilities with assets and perpetual futures positions. Hermetica runs multiple risk engines in parallel across multiple geographic locations and cloud providers in order mitigate the possibility of a third party failure. ## Hermetica Reserve Fund The Hermetica Reserve Fund is a reserve of assets maintained by Hermetica to safeguard against negative funding rate environments as well as other unforeseen adverse events. The Reserve Fund mechanism takes a portion of the protocol yield generated in positive funding rate environments and sets it aside for periods of negative funding. For more information about the Hermetica Reserve Fund, please visit this page: {% content-ref url="/pages/Q7Bcc4CWG9YjgNnjx4xP" %} [Hermetica Reserve Fund](/usdh/hermetica-reserve-fund) {% endcontent-ref %} # Yield Where does sUSDh yield come from? ## Overview The yield for sUSDh is generated through funding rate payments from short perpetual futures positions, used to stabilize the dollar value of USDh. This mechanism leverages the dynamics of the futures market to provide consistent returns. ## Funding Rates #### What is the Funding Rate? In the futures market, the **funding rate** serves as a mechanism to align the price of perpetual futures contracts with the underlying spot price of the asset. Perpetual futures, unlike traditional futures contracts, have no expiration date. Therefore, the funding rate acts as a continuous adjustment tool. When the futures price trades above the spot price, the funding rate increases, making it more costly to maintain long positions. This incentivizes traders to exit their long positions or new short positions to enter the market, bringing the futures price back in line with the spot price. #### How Funding Rates Influence Yield The **yield for USDh** comes from the structural **demand for long leverage in Bitcoin**, a common characteristic of high-beta assets with significant volatility. As long as there is strong demand for leveraged long positions, the futures market tends to trade above spot prices. This results in higher funding rates, which pay Hermetica's short positions, thereby generating yield for USDh stakers. The funding rate calculations on centralized exchanges include a positive base to account for the cost of capital. As a result, funding rates are positive even in a steady state of the same amount of shorts and longs in the system, further underlying the sustainability of the USDh yield mechanism #### Yield Distribution USDh yield is distributed to stakers (sUSDh holders) on a daily basis. **Historical Performance** Refer to this section of the docs for more information on the historical performance: {% content-ref url="/pages/QpEhWPvw0gYTICjP7nMu" %} [Historical Performance](/usdh/historical-performance) {% endcontent-ref %} {% hint style="info" %} In the event funding rate payments are negative, the funds in the [Hermetica Reserve Fund](https://app.gitbook.com/o/yqsrEF2PdPdJxaRpgr41/s/xp26OjT5H1o55M1QMDI4/~/changes/4/tokens/usdh-and-susdh/hermetica-insurance-fund) are used. This ensures USDh yield is always neutral or positive. {% endhint %} # Backing USDh is issued natively on Bitcoin Layer 1 and 2s and is designed to maintain a $1 target value through 1:1 reserve backing and delta-neutral basis positions. Hermetica publishes monthly attestations detailing protocol assets, liabilities, and reserve coverage.
2026 Attestations * [January 2026](https://blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-january-2026) * [February 2026](https://blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-february-2026) * [March 2026](https://blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-march-2026) * [April 2026](https://blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-april-2026) * [May 2026](https://blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-may-2026) * [June 2026](https://blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-june-2026) * [July 2026](https://blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-july-2026)
2025 Attestations * [January 2025](https://www.blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-january-2025) * [February 2025](https://www.blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-february-2025) * [March 2025](https://www.blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-march-2025) * [April 2025](https://www.blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-april-2025) * [May 2025](https://www.blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-may-2025) * [June 2025](https://www.blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-june-2025) * [July 2025](https://www.blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-july-2025) * [August 2025](https://www.blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-august-2025) * [September 2025](https://www.blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-september-2025) * [October 2025](https://www.blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-october-2025) * [November 2025](https://www.blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-november-2025) * [December 2025](https://www.blog.hermetica.fi/p/custodian-attestations-of-assets-backing-usdh-december-2025)
## Assets ### Custodians The BTC assets backing the protocol are securely held in institutional-grade custodians. All assets used to margin trades are stored in the off-exchange settlement solutions of Copper (Clearloop) and Ceffu (MirrorX) . The custodians deposit addresses show the protocol inflows from minting transactions: * Ceffu 1: [141Pg9KB1fLgqY3vTABhrKoKyQDD7jjj9a](https://mempool.space/address/141Pg9KB1fLgqY3vTABhrKoKyQDD7jjj9a) * Ceffu 2: [16GCfT1bnJR6yZy5uZiBKDAc4HMyF2e9dS](https://mempool.space/address/16GCfT1bnJR6yZy5uZiBKDAc4HMyF2e9dS) * Copper: [bc1qag4ur2guhalkl8hxx6uy9v0pq4e3l2sxlst9v5](https://mempool.space/address/bc1qag4ur2guhalkl8hxx6uy9v0pq4e3l2sxlst9v5) ## Liabilities ### Runes The Runes protocol requires the entire token supply to be defined in the initial etching transaction. Both USDh and sUSDh have a total supply of 1 quadrillion tokens, stored in the protocol's reserve. Tokens enter circulation through minting and staking. The circulating supply is verifiable on-chain by subtracting the tokens held in the reserve and protocol wallets from the total supply:\ \ `Circulating supply = 1 quadrillion - reserve wallet - protocol wallets`
USDh & sUSDh Runes Protocol Wallets and Token Etchings **Protocol Wallets** * Reserve Wallet: [bc1q24t48s4lyks0309u9arqtqcrj5txc73pf6xfuxcfdgznz92wewvs8lr8re](https://ordinals.com/address/bc1q24t48s4lyks0309u9arqtqcrj5txc73pf6xfuxcfdgznz92wewvs8lr8re) * Protocol Wallet 1: [bc1ppd9xd0dgnt88wfxv4fudy407y4mvq8ar62r5xw9yrlzsfxxcr96sskfd2w](https://ordinals.com/address/bc1ppd9xd0dgnt88wfxv4fudy407y4mvq8ar62r5xw9yrlzsfxxcr96sskfd2w) * Protocol Wallet 2: [bc1p7s7qa93gckae09lmvxpqm6j7xeva6a0pstu53397s7te86jeygxss0f0a4](https://ordinals.com/address/bc1p7s7qa93gckae09lmvxpqm6j7xeva6a0pstu53397s7te86jeygxss0f0a4) **Token Etchings** * USDh Token Etching: [USDH•USDH•USDH•USDH](https://ordinals.com/rune/USDH%E2%80%A2USDH%E2%80%A2USDH%E2%80%A2USDH) * sUSDH Token Etching: [SUSDH•SUSDH•SUSDH•SUSDH](https://ordinals.com/rune/SUSDH%E2%80%A2SUSDH%E2%80%A2SUSDH%E2%80%A2SUSDH)
### Stacks USDh token contract: [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.usdh-token-v1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.usdh-token-v1?chain=mainnet) The circulating supply is verifiable on-chain by calling the `get-total-supply` method in the [USDh token contract](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.usdh-token-v1?chain=mainnet). {% hint style="success" %} On the [block explorer](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.susdh-token-v1?chain=mainnet) the `get-total-supply` function can be called under the `Available functions` tab to independently verify USDh's circulating supply on Stacks. {% endhint %} # Technical Primitives USDh and sUSDh are issued natively on Bitcoin L1 (Runes) and the Bitcoin L2 Stacks. ## Runes We use PSBTs to mint and stake. No bridges, L2s, or altcoins are involved.
USDh & sUSDh Runes Protocol Wallets and Token Etchings **Protocol Wallets** * Reserve Wallet: [bc1q24t48s4lyks0309u9arqtqcrj5txc73pf6xfuxcfdgznz92wewvs8lr8re](https://ordinals.com/address/bc1q24t48s4lyks0309u9arqtqcrj5txc73pf6xfuxcfdgznz92wewvs8lr8re) * Protocol Wallet 1: [bc1ppd9xd0dgnt88wfxv4fudy407y4mvq8ar62r5xw9yrlzsfxxcr96sskfd2w](https://ordinals.com/address/bc1ppd9xd0dgnt88wfxv4fudy407y4mvq8ar62r5xw9yrlzsfxxcr96sskfd2w) * Protocol Wallet 2: [bc1p7s7qa93gckae09lmvxpqm6j7xeva6a0pstu53397s7te86jeygxss0f0a4](https://ordinals.com/address/bc1p7s7qa93gckae09lmvxpqm6j7xeva6a0pstu53397s7te86jeygxss0f0a4) **Token Etchings** * USDh Token Etching: [USDH•USDH•USDH•USDH](https://ordinals.com/rune/USDH%E2%80%A2USDH%E2%80%A2USDH%E2%80%A2USDH) * sUSDH Token Etching: [SUSDH•SUSDH•SUSDH•SUSDH](https://ordinals.com/rune/SUSDH%E2%80%A2SUSDH%E2%80%A2SUSDH%E2%80%A2SUSDH)
## Stacks We use Clarity based smart contracts to issue SIP-10 USDh and sUSDh on the Stacks blockchain.
USDh & sUSDh Stacks Smart Contract Addresses * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.usdh-token-v1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.usdh-token-v1?chain=mainnet) * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.susdh-token-v1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.susdh-token-v1?chain=mainnet) * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.hq-v1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.hq-v1?chain=mainnet) * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.controller-v1-1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.controller-v1-1?chain=mainnet) * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.emergency-recover-v1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.emergency-recover-v1?chain=mainnet) * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.minting-v1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.minting-v1?chain=mainnet) * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.minting-auto-v1-2](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.minting-auto-v1-2?chain=mainnet) * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.minting-auto-state-v1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.minting-auto-state-v1?chain=mainnet) * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.minting-auto-trait-v1](https://explorer.hiro.so/txid/0x38470c474f7258f67c88cc84ae8309ca391141d26e1369dab06a393e0292e31a?chain=mainnet) * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.minting-state-v1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.minting-state-v1?chain=mainnet) * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.minting-otc-v1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.minting-otc-v1?chain=mainnet) * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.redeeming-reserve-v1-2](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.redeeming-reserve-v1-2?chain=mainnet) * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.staking-v1-1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.staking-v1-1?chain=mainnet) * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.staking-reserve-v1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.staking-reserve-v1?chain=mainnet) * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.staking-silo-v1-1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.staking-silo-v1-1?chain=mainnet) * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.staking-silo-trait-v1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.staking-silo-trait-v1?chain=mainnet) * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.staking-state-v1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.staking-state-v1?chain=mainnet) * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.staking-trait-v1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.staking-trait-v1?chain=mainnet) * [SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.usdh-airdrop-v1](https://explorer.hiro.so/txid/SPN5AKG35QZSK2M8GAMR4AFX45659RJHDW353HSG.usdh-airdrop-v1?chain=mainnet)
{% hint style="success" %} View the USDh smart contracts [on Github](https://github.com/hermetica-fi/hermetica-contracts). {% endhint %} {% hint style="success" %} The smart contracts have been audited by [Clarity Alliance](https://github.com/Clarity-Alliance/audits/blob/main/Clarity%20Alliance%20-%20Hermetica.pdf) and [Strata Labs](https://drive.google.com/file/d/1uq7weWjH2_nQr8fyqLvbQ7GR8Bhps4Hz/view). Learn [more](https://docs.hermetica.fi/usdh/how-it-works/security-mechanisms). {% endhint %} # Historical Performance {% hint style="info" %} Note: Backtest results are not a guarantee of future returns. {% endhint %} Our backtests from January 2021 to September 2025 show an **average APY of 10.56%** for the BTC funding rate. This Bitcoin-native yield fluctuates based on market demand for long leverage. In the 2022 bull market, the annualized return reached 25.03%. The 2023 bear market saw a 1.83% return. Only 5.9% of days in the backtest period had negative funding.

sUSDh Historical Performance

{% hint style="info" %} Since 100% of USDh generates yield but only a subset of USDh is staked and accrues the yield, the real return to stakers can be higher than the BTC funding rate backtest results. {% endhint %} # Hermetica Reserve Fund ## Overview The Hermetica Reserve Fund is a reserve of assets maintained by Hermetica to safeguard against negative funding rate environments as well as other unforeseen adverse events. The fund primarily covers two types of events: 1. Negative funding rates 2. Exchange failure {% hint style="info" %} For a detailed analysis of the Hermetica Reserve Fund, please refer to our [research paper](https://docs.google.com/document/d/1lcwwLR7XGy3fcs4DhPrgBphBlMzoNbtj4H1qEWzHSEY/edit?usp=sharing). {% endhint %} ## Negative Funding Rates As detailed in the [Yield Mechanism](https://app.gitbook.com/o/yqsrEF2PdPdJxaRpgr41/s/xp26OjT5H1o55M1QMDI4/~/changes/4/tokens/usdh-and-susdh/how-it-works/yield-mechanism) section, the yield for USDh is generated from the funding rate accrued by short perpetual futures positions. Typically, the funding rate is positive, resulting in yield generation. However, there are instances where the funding rate turns negative. During these times, the position backing USDh incurs interest payments, which would otherwise lead to negative yield on USDh. To prevent this, the Hermetica Reserve Fund covers these interest payments, ensuring the principal value remains stable and USDh stakers only receive neutral or positive yield. Our risk management systems use current and historical data to conservatively assess the optimal capitalization of the Reserve Fund, based on the total value locked (TVL) of USDh. ## Exchange Failure Exchanges, whether centralized or decentralized, are prone to hacks and failures. While the off-exchange settlement systems of the custodians we use safeguard collateral, the failure of a hedging venue could lead to not honoring unrealized profits, which could result in a partial unbacking of the protocol's liabilities. In such cases, Hermetica’s risk management systems seek to re-hedge the position on another venue and any negative PnL accrued between off-exchange settlement periods is covered by the Hermetica Reserve Fund. ## Reserve Fund Capitalization Hermetica initially funds the Hermetica Reserve Fund. The optimal size of the fund is continuously reassessed based on several factors, including: * Total amount of USDh in circulation (TVL) * Bitcoin volatility * General market conditions ## Security The Hermetica Reserve Fund is held in an array of multisig wallets which are controlled by Hermetica. All addresses associated with the Hermetica Reserve Fund are publicly available and Hermetica receives periodical proof of funds attestations from our counterparties and third party audit firms. # Audits Hermetica is a security-first company, which means the integrity of our smart contracts is among top priority. We uphold this standard through comprehensive audits that identify vulnerabilities, logic errors, and inefficiencies. The audits are conducted by independent experts in the industry. ## Reports ### Clarity Alliance Audit on v1 of contracts {% file src="/files/FF9ZZspEu2Wdd6thfXhn" %} Our initial audit on the first version of the contracts was performed by Clarity Alliance on 17 June 2024. All feedback and optimizations were reviewed and patched during the audit cycle. ### StrataLabs Audit on v1 of contracts {% file src="/files/ys4VI01zOyHgH6EPGNHq" %} Attached is the audit report by StrataLabs completed on 12 June 2024. No critical or high level issues were identified. All small and medium-level feedback and optimisations were reviewed and patched during the audit cycle. ### Clarity Alliance Audit on v1 of minting-auto contract {% file src="/files/c0ApkAd8RWSsF28oCowh" %} Attached is the audit report by Clarity Alliance completed on 20 March 2025. All feedback and optimizations were reviewed and patched during the audit cycle. ### Clarity Alliance Audit on USDh staking contracts upgrade {% file src="/files/LeJwdxWRiNilUFHR4Dqo" %} Attached is the audit report by Clarity Alliance completed on 04 September 2025. No high severity issues were identified without mitigation plans already in place. Low severity findings were reviewed and addressed during the audit cycle. # Risk Disclosures Like all investment applications, Hermetica inherently involves a variety of risks. These risks should be understood and carefully considered before use. With that being said, our team has worked hard to limit or mitigate as much risk as possible. For a better understanding of the risks involved in using Hermetica's product, please read below. {% content-ref url="/pages/GKrxvQ3p8CbkvAcfUqTD" %} [Collateral Risk](/usdh/risk-disclosures/collateral-risk) {% endcontent-ref %} # Collateral Risk To mint USDh, clients have to deposit Bitcoin, which is the collateral that backs the delta-neutral derivatives position. This collateral needs to be kept safe and managed appropriately in order to ensure USDh's stability. This involves two primary risks. ### **Custody Risk** Even though the collateral that is deposited to Hermetica is held by established large-scale crypto custodians, the risk exists that these custodians become iliquid. This might be due to a hack or other malicious activity. #### **Mitigation** In order to mitigate this risk, Hermetica uses a variety of custody providers. In the event of a failure on the part of any single provider, the loss will be contained. ### **Collateral Management Risk** Hermetica's operational complexity comes from the fact that it has to make sure that its USDh liability is fully hedged. An operational failure may lead to an uncovered positions and hence lead to a value loss for USDh. #### **Mitigation** To minimize this possibility, our risk engine runs risk checks every 100 milliseconds and reconciles our liability against our assets. Hermetica runs multiple risk engines in parallel across multiple geographic locations and cloud providers in order mitigate the possibility of a third party failure. # Exchange Risk In order to maintain the stability of the position backing USDh, Hermetica hedges the fiat exposure on a centralized derivatives exchange. In the scenario that the exchanges becomes unavailable due to a bankruptcy, hack or operational failure, the USDh liability may become un-hedged. #### **Mitigation** **Off-Exchange Settlement**: Hermetica uses off-exchange settlement systems that allow us to hold collateral off of the exchange. In the event of an exchange failure, only unsettled PnL would be lost. This loss should be easily covered by the Hermetica Insurance Fund. **Exchange Diversification**: Since we consider exchange failure one of the highest risk components of Hermetica's operation, we execute our hedges across a variety of exchanges in order to diversify. In the event that any one of the exchanges fails we are able to cover our exposure on any of the other exchanges. The lost PnL is covered by the [Hermetica Reserve Fund](/usdh/hermetica-reserve-fund). # Liquidity Risk When minting USDh, Hermetica has to make sure that there is enough liquidity in the futures market to execute a delta-neutral trade. If for any reason Hermetica is not able to source enough liquidity to either increase or unwind a derivative position, it will not be able to either mint or redeem USDh tokens. Naturally this will lead to a loss. #### **Mitigation** In order to avoid any liquidity issues,Hermetica reserves the right to restrict minting of new USDh if it deems derivative markets to be too iliquid to absorb more short open interest. We have conducted extensive analysis of historical liquidity data across the largest derivative exchanges to measure the liquidity risk effectively. # Funding Rate Risk The native yield of sUSDh is generated by a positive funding rate incurred by the short position backing the Bitcoin-native bond. While on average the funding rate is positive (yield generating), it is possible that at times, typically during bear markets, the funding rate can go negative. This means that the position held by Hermetica incurs a cost. This deteriorates the collateral of the USDh hedged position and causes a loss in value. #### **Mitigation** We mitigate this risk by having the [Hermetica Reserve Fund](/usdh/hermetica-reserve-fund) that kicks in every time negative funding has to be paid. Using historical funding data as well as forward looking analysis, we have determined a safe initial size of the insurance fund that makes the risk of depletion due to negative funding unlikely. In addition, the Hermetica Reserve Fund grows over time, as a fraction of the positive funding is fed into the Reserve Fund. We adjust this fraction according to market conditions. # General Risk Please consider information in this Risk Disclosure Statement (“Statement”) as a general overview of the risks associated with the services offered by Hermetica Labs and its affiliates (the “Services”) made for your awareness only. We do not intend to provide investment or legal advice through this Statement and make no representation that the Services described herein are suitable for you or that information contained herein is reliable, accurate or complete. We do not guarantee or make any representations or assume any liability regarding financial results based on the use of the information in this Statement, and further do not advise to rely on such information in the process of making a fully informed decision whether or not to use the Services. The risks outlined in this Statement are not exhaustive and this Statement only outlines the general nature of certain risks associated with crypto assets, and does not discuss in detail all risks associated with holding or trading crypto assets. Users should undertake their own assessment as to the suitability of using crypto assets and associated Services based on their own investigations, research and based on their experience, financial resources, and goals. You should not deal with crypto assets unless you understand their nature and the extent of your exposure to risk. Note that specific disclosures and terms of service will apply with respect to various offerings of Hermetica Labs, which will be published separately. Users should refer to those terms in addition to the disclosures herein when deciding whether to utilize the Services. For the purpose of this Statement “you”, “your”, and “User” mean a user of our services and “we”, “us”, “our”, or “Hermetica”, mean Hermetica Labs, Inc. Users are strongly advised to read this Risk Disclosure Statement carefully before deciding to start using the Services. RISK OF LOSS IN TRADING CRYPTO ASSETS CAN BE SUBSTANTIAL AND YOU SHOULD, THEREFORE, CAREFULLY CONSIDER WHETHER SUCH ACTIVITY IS APPROPRIATE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD BE AWARE OF THE FOLLOWING: **Crypto Assets Are Not Legal Tender In Most Jurisdictions** Most crypto assets are not backed by any central government or legal tender (except in few, discrete cases), meaning each country has different standards. There is no assurance that a person who accepts crypto assets as payment today will continue to do so in the future. Holders of crypto assets put their trust in a digital, decentralized, and partially anonymous system that relies on peer-to-peer networks and cryptography to maintain its integrity, and neither vendors nor individuals have an obligation to accept crypto assets as payment in the future; **Loss of value, Volatility and Uncertainty of Future Performance** There is typically limited or no fundamental reasoning behind the pricing of crypto assets, creating the risk of volatility and unpredictability in the price of crypto assets relative to fiat currencies. Crypto assets have had historically higher price volatility than fiat currencies, including irrational and extreme moves in price as the process for valuation can be speculative and uncertain. **Liquidity Risk** Crypto assets can have limited liquidity that can make it difficult or impossible to sell or exit a position when desired. This can occur at any time, especially during periods of high volatility. **Market forces** Trading in crypto assets may be susceptible to irrational market forces, such as speculative bubbles, manipulation, scams, and fraud. **Financial Crime and Cyber Attacks** Cyber crime relating to crypto assets can be more prevalent than other financial crime as the ecosystem is totally digital and traditional governance and risk mitigants may be lacking. For example, a 51% attack is an attack on a blockchain by any person or group of persons who control more than 50% of the network. Attackers with majority control of a network can interrupt the recording of new blocks, alter payment history, and subvert funds. Users are susceptible to malware and fake/hijacked addresses and other forms of cyber-attacks and Users should always take care of passwords and double check the addresses and URLs before loading software or interacting with any platform, protocol, or service. **Absence of Control** Hermetica is not a broker, agent or advisor and has no fiduciary relationship or obligation to Users in connection with any transaction or other decision or activity undertaken by you using the Services. We do not control whether your use of the Services is consistent with your financial goals. It is up to Users to assess whether their financial resources are appropriate for their respective activity with us and risk appetite in the products and services you use. **Availability of Services** We do not guarantee that the Services will be available at any given time or that the Services will not be subject to unplanned service interruptions or network congestion. You may not be able to buy, sell, store, transfer, redeem, send, or receive crypto assets when you want to. **Technology Risk** The risks of crypto assets being transacted via new technologies (including distributed ledger technologies) include, among other things, anonymity, irreversibility of transactions, accidental transactions, transaction recording, and settlement. Transactions in crypto assets on a blockchain relies on the proper functioning of complex software, which exacerbates the risk of access to or use of crypto assets being impaired or prevented. Moreover, there is risk of failures, defects, hacks, exploits, protocol errors, or unforeseen circumstances that might occur in connection with a crypto asset or the technologies on which the crypto asset is based. **Irreversible Transactions** Transactions in crypto assets are generally irreversible. As a result, losses due to fraudulent or accidental transactions may not be recoverable. **Third Party Risk** Third parties such as payment providers, custodians, exchanges, and banking partners may be involved in the provision of the Services. You may be subject to the terms and conditions of these third parties, and Hermetica cannot be responsible for any losses these third parties may cause you. **Taxation and Disclosure of Information** You are responsible for determining the taxes to which you may be subject and their application when using the Services. It is your responsibility to report and pay any taxes that may arise from transactions and you acknowledge that Hermetica does not provide legal or tax advice regarding such transactions. If you have concerns about your tax treatment or obligations you may wish to seek independent advice. You understand that when, where, and as required by applicable law, Hermetica will disclose available information relating to transactions transfers, distributions or payments to the appropriate regulatory and tax authorities or other public authorities. Similarly, when, where and as required by applicable law, Hermetica will withhold taxes related to your transactions, transfers, distributions or payments. **No Investment and Legal Advice** Communications or information provided by Hermetica shall not be considered or construed as investment advice, financial advice, trading advice, or any other type of advice. The User is the only party who can determine whether an investment, investment strategy or related transaction is appropriate based on his or her personal investment objectives, financial situation and risk tolerance, and shall be solely responsible for any losses or liabilities that may result. **Regulatory Risk** The regulation of crypto assets and platforms is uncertain in many jurisdictions and Hermetica cannot be held responsible for compliance with legal rules of countries from which customers, on their own initiative, access the Services. Moreover, changes in rules applicable to crypto assets may considerably impact on the prices of those assets and are unpredictable. You further acknowledge the above list of risks is non- exhaustive and there may also be unpredictable risks. # User Guides How to make the most of USDh. {% content-ref url="/pages/IdtsiLyMt2DlCoY5qo8G" %} [Buy USDh](/resources/user-guides/buy-usdh) {% endcontent-ref %} {% content-ref url="/pages/3hKYT2Cv5Mouv2ajuCjJ" %} [Stake USDh](/resources/user-guides/stake-usdh) {% endcontent-ref %} {% content-ref url="/pages/exGWyXRzoCz1q6Z7q1Yt" %} [Check Your Hermetica Portfolio](/resources/user-guides/check-your-hermetica-portfolio) {% endcontent-ref %} # Buy USDh Anyone can buy USDh on the open DeFi markets. To make it even easier, you can also buy USDh directly from the [Hermetica app](https://app.hermetica.fi/buy). ## On Hermetica To buy USDh directly on the Hermetica App, simply: 1. Visit the [Hermetica App](https://app.hermetica.fi/) and click the ["Swap" tab](https://app.hermetica.fi/swap) 2. Click the profile icon 3. Connect your wallets 4. Confirm the currency and enter the amount 5. Click "Swap" and confirm the transaction {% embed url="" %} ## On Other Apps For information on buying USDh directly through a specific platform, please see below.
Buy on Magic Eden 1. **Visit the** [**USDh page**](https://magiceden.io/runes/USDH%E2%80%A2USDH%E2%80%A2USDH%E2%80%A2USDH) on **Magic Eden** 2. **Connect your Bitcoin wallet** using the button in the top-right corner 3. **Choose the amount** of USDh you want to purchase from the lots listed 4. **Confirm the transaction**
Buy on DotSwap 1. **Visit the** [**USDh swap page**](https://www.dotswap.app/swap#R_%E2%80%A2BTC_%E2%80%A2USDH%E2%80%A2USDH%E2%80%A2USDH%E2%80%A2USDH) on **DotSwap** 2. **Connect your Bitcoin wallet** using the the button in the top-right corner 3. **Choose the amount of USDh** you want to purchase 4. **Confirm the transaction**
Buy on Velar 1. **Visit the** [**USDh swap page**](https://app.velar.com/swap?fromtoken=USDh) on **Velar** 2. **Connect your Stacks wallet** using the the button in the top-right corner 3. **Choose your preferred currencies** and the **amount of USDh** you want to purchase 4. **Confirm the transaction**
Buy on Bitflow 1. **Visit the** [**USDh swap page**](https://app.bitflow.finance/trade?x=USDh) on Bitflow 2. **Connect your Stacks wallet** using the the button in the top-right corner 3. **Choose your preferred currencies** and the **amount of USDh** you want to purchase 4. **Confirm the transaction**
# Stake USDh Stake USDh with Hermetica to instantly start earning up to 15% APY. ## Stake USDh To stake your USDh: 1. Go to the [Hermetica App](https://app.hermetica.fi/stake) and click the ["Stake" tab](https://app.hermetica.fi/stake) 2. Click the profile icon 3. Confirm your preferred chain 4. Enter the amount of USDh, click "Stake", and confirm the transaction {% embed url="" %} # Check Your Hermetica Portfolio Connect your wallet and visit the [Hermetica Portfolio ](https://app.hermetica.fi/portfolio)to view: * USDh and sUSDh holdings * Yield * APY * sUSDh price * Daily payments ## Check your Hermetica Portfolio {% embed url="" %} Check your Hermetica Portfolio at any time by navigating to the [Hermetica Portfolio page](https://app.hermetica.fi/portfolio). # FAQs Please take a look through the FAQs for an answer to your questions. If you can't find what you are looking for, reach out to our team on [Discord](https://discord.gg/RuZacQbNn6) and we'll be happy to help!
What is the difference between USDh and sUSDh? USDh is a Bitcoin-backed stablecoin fully outside of the banking system. It represents one USD worth of BTC. Learn more about how it works [here](https://www.notion.so/o/yqsrEF2PdPdJxaRpgr41/s/xp26OjT5H1o55M1QMDI4/~/changes/5/usdh/how-it-works/~/comments/TYrfpC2PwXxcicgviOTQ?node=QukA2xUk7Nyk). sUSDh is the yield-bearing liquid staking token (LST) issued when USDh is staked. sUSDh accrues yield from funding rate payments.
What are the benefits of USDh and sUSDh? USDh is a synthetic dollar fully backed by Bitcoin and fully outside the banking system—it's Bitcoin all the way down. USDh allows you to hold dollars in your Bitcoin wallet. sUSDh allows you to earn an attractive Bitcoin native yield of up to 15% APY derived from funding rate payments.
Where can I buy USDh? You can buy USDh on common crypto marketplaces. On Runes, you can buy USDh on [Magic Eden](https://magiceden.io/runes/USDH%E2%80%A2USDH%E2%80%A2USDH%E2%80%A2USDH) and [DotSwap](https://www.dotswap.app/swap#R_BTC_USDH%E2%80%A2USDH%E2%80%A2USDH%E2%80%A2USDH). On Stacks, you can buy USDh on [Bitflow](https://app.bitflow.finance/trade?x=USDh), [Velar](https://app.velar.com/swap?fromtoken=USDh), and directly through the [Hermetica app](https://app.hermetica.fi/buy) which routes your transaction through DeFi pools. [Click here](https://app.hermetica.fi/buy) to get started.
How does Hermetica maintain the USDh peg? The protocol couples spot BTC holdings with a short perpetual futures position. This eliminates the exposure to Bitcoin's price (delta-neutral) and creates a price stable USD position.
Where does the yield come from? The yield is generated through funding rate payments from short perpetual futures positions, which are used to stabilize the dollar value of USDh.\ \ In derivatives markets, funding rates refer to periodic payments made from one side of the market to the other to help balance out the price of the derivative vs. the underlying asset.\ \ Whenever the funding rate is positive (long positions are paying short positions), the position held by Hermetica earns interest. Hermetica passes the yield to those who stake USDh.
What happens if the funding rate is negative? The native yield of sUSDh is generated by a positive funding rate incurred by the short position backing USDh. While on average the funding rate is positive (yield generating), it is possible that at times, typically during bear markets, the funding rate can go negative. This means that the position held by Hermetica incurs a cost. Hermetica mitigates this risk by having the [Hermetica Reserve Fund](/usdh/hermetica-reserve-fund) that kicks in every time negative funding has to be paid. The Hermetica Reserve Fund grows over time, as a fraction of the positive funding is fed into the Reserve Fund. We adjust this fraction according to market conditions. Using historical funding data as well as forward looking analysis, we have determined a safe initial size of the Reserve Fund that makes the risk of depletion due to negative funding unlikely. To learn more [read our Reserve Fund paper](https://docs.google.com/document/d/e/2PACX-1vSPRYWX4iCTxT8rDHFoObJBKrtXmub65kN_KNPATA4Cfis7wP1pfLkFdNvX9Vzc7vAceFmSpm13d5TU/pub).
Why are USDh and sUSDh backed by Bitcoin instead of another asset? Bitcoin, being strictly limited in supply, is the hardest collateral asset in the world - digital gold. By making USDh the first dollar on the new digital gold standard, it inherits the properties of Bitcoin: * Independence from the fiat banking system * Reliable, secure and censorship resistant At Hermetica, we take the bold position that the world economy will converge on a new Digital Gold Standard, the Bitcoin Standard. To express this view, USDh is entirely Bitcoin-backed.
What if the Bitcoin price moves up or down? Will my USDh value change? No, the fully delta-neutral position used to maintain the peg removes all exposure to Bitcoin’s price movement. You can think of it this way: 1 USDh always equals $1.00 of Bitcoin.
Why would I hold USDh over Bitcoin? USDh is not a competitor to Bitcoin; USDh is an alternative to dollars in a bank account. While we believe the world will converge on a Bitcoin Standard, US dollars still play a critical role in the economy. Here are the top use cases of USDh: * Earn a dollar yield of up to 15% * Hold dollars outside the fiat system * Transact dollars in Bitcoin DeFi
Why launch on Runes? What are Runes? **The What** The Bitcoin Runes Protocol (Runes) is a fungible token standard created by Casey Rodarmor, the creator of Ordinals. Runes leverages the Bitcoin's [Unspent Transaction Output (UTXO)](https://www.kraken.com/learn/what-is-bitcoin-unspent-transaction-output-utxo) model, minimizing the amount of additional data stored on the blockchain. In essence, Runes functions as a specialized layer on top of the Bitcoin network and allows anyone to easily generate and transfer fungible tokens. **The Why** Hermetica launched USDh on Runes to be fully native to Bitcoin Layer 1. We use PSBTs to mint and stake, no L2s or altchains are needed. Runes makes it possible to hold a stablecoin in your Bitcoin wallet and transfer your stablecoin in Bitcoin transactions while the asset itself (USDh) *is* Bitcoin.
What blockchains do USDh and sUSDh operate on? USDh and sUSDh are currently live and natively issued on Bitcoin Layer 1 via Runes and Bitcoin Layer 2 via Stacks. We will evaluate potential expansions as new L1 and L2 solutions develop on Bitcoin and other blockchains.
Has Hermetica been audited? Yes. Hermetica is [security-first](https://www.blog.hermetica.fi/p/why-hermetica-is-security-first) and dedicated to maintaining highly secure and professionally audited smart contract infrastructure. To this end, we conduct regular comprehensive security audits with independent third-party services, like [Clarity Alliance](https://github.com/Clarity-Alliance/audits/blob/main/Clarity%20Alliance%20-%20Hermetica.pdf) and [Strata Labs](https://drive.google.com/file/d/1uq7weWjH2_nQr8fyqLvbQ7GR8Bhps4Hz/view). Hermetica ensures that its infrastructure remains resilient against an evolving security threat landscape.
How does Hermetica mitigate risk? Hermetica’s products are built on trust-minimized infrastructure that allow Hermetica to bridge CeFi liquidity into DeFi with minimum counterparty risk and maximum security. Hermetica employs mitigation strategies for all identified risks. For more detailed information, please refer to the [Hermetica Risk Disclosures](/usdh/risk-disclosures) or review the risk FAQs below.
How does Hermetica mitigate custody risk? Bitcoin collateral, which backs USDh, is held across multiple established, institutional-grade custody providers. This diversification minimizes the impact of any single custodian’s failure, such as bankruptcy or a security incident, ensuring the overall safety of collateral. According to data from [Into The Block](https://app.intotheblock.com/perspectives/defi_exploits), there is a \~4% annual risk of total fund loss when holding assets in smart contracts. Institutional-grade custodians, on the other hand, have not suffered any hacks or loss of customer funds since their inception.
How does Hermetica mitigate collateral management risk? Hermetica's operations rely on maintaining a fully hedged position for USDh liabilities. The protocol couples spot BTC holdings with a short perpetual futures position. This position is considered delta-neutral because it is fully hedged – as a result, the underlying position is stable in dollar terms. Advanced risk engines continuously monitor and reconcile liabilities against assets every 100 milliseconds. This means every 100 milliseconds assets are compared against liabilities to ensure the position remains fully hedged. Multiple engines are deployed across different geographic locations and cloud providers to reduce the risk of operational or third-party failures.
How does Hermetica mitigate exchange risk? To hedge USDh, Hermetica uses centralized derivatives exchanges. The risks of exchange failures, such as bankruptcy or hacking, are mitigated through off-exchange settlement (OES) systems offered by the institutional-grade custodians used by Hermetica. The OES custodians allow Hermetica to mirror funds to exchanges in order to trade without the funds ever being exposed to the exchanges’ balance sheet. In addition, any potential losses from unsettled trades are covered by the Hermetica Reserve Fund and hedging is diversified across multiple exchanges to reduce reliance on any single platform. Read more [here](https://docs.hermetica.fi/usdh/how-it-works/mint-mechanism).
How does Hermetica mitigate liquidity risk? Hermetica mitigates liquidity risk by actively monitoring the capacity of derivative markets to handle the trades needed to hedge USDh. If market liquidity is low—meaning there aren’t enough buyers or sellers to execute trades efficiently without significant price disruption—Hermetica may temporarily restrict the minting of new USDh tokens to protect the system.
How does Hermetica mitigate funding rate risk? The yield on sUSDh depends on positive funding rates. To manage the risk of negative funding rates, particularly during market downturns, the [Hermetica ](https://docs.hermetica.fi/usdh/hermetica-insurance-fund)[Reserve](https://docs.hermetica.fi/usdh/hermetica-insurance-fund)[ Fund](https://docs.hermetica.fi/usdh/hermetica-insurance-fund) steps in to cover losses. This fund grows over time by allocating a portion of positive funding gains, ensuring it remains robust against prolonged negative funding periods.
What does the 'h' in USDh/sUSDh stand for? The 'h' stands for both Hermetica and hedged - a reference to the [underlying mechanics of USDh](/usdh/how-it-works).
# Legal # Privacy Policy Hermetica Labs Privacy Policy Last Updated: October 30, 2025 **Overview** This Privacy Policy explains how Hermetica collects, uses, and discloses information about you through its websites, including web applications, and other online products and services (collectively, the “Services”) or when you otherwise interact with us. We may change this Privacy Policy from time to time. If we make changes, we will notify you by revising the date at the top of the Privacy Policy and, in some cases, we may provide you with additional notice (such as adding a statement to our homepage or sending you a notification). We encourage you to review the Privacy Policy whenever you access the Services or otherwise interact with us to stay informed about our information practices and the choices available to you. Any capitalized terms in this Privacy Policy are defined in our Terms of Service available at [https://hermetica.fi/terms](https://www.hermetica.fi/terms). **1. Data Collection** We collect certain information about you when you visit the Services. This information may personally identify you or have the potential to personally identify you (“Personal Information”). This section describes the Personal Information we collect and the sources of that information. *Information We Collect* **• Identifiers.** We collect your email address, wallet address(es) and related on-chain identifiers, IP Address, device ID, type of browser, or other unique personal or online identifiers. **• Internet or Other Electronic Network Activity Information.** We may collect information regarding your interaction with the Services, including time of visit and geolocation data, pages visited, links clicked, emails opened, language preferences, and the pages that led or referred you to our Services. We may also collect information automatically from your device, such as device type, operating system name and version, device manufacturer and model, language, plug-ins, and add-ons. **• Geolocation Data.** We may collect your physical location or infer your physical location based on your IP address or other network or voluntarily provided information. You may refuse to provide, or request that we delete, certain categories of Personal Information we have about you. However, if our collection of the Personal Information is required by law or contract or is necessary for you to access or use the Services, we may be unable to provide the Services to you. *Data Sources* • We may automatically collect certain information about the mobile device, computer or other devices that you use to access the Services through commonly used information-gathering tools, such as cookies and web beacons (see our Cookies section below). • You provide some Personal Information to us directly. For example, you provide Identifiers, such as an email address for us to create your account on the Platform. • We may generate information about you based on our relationship with you or your use of the Services. Such information may be aggregated or anonymized before we process it. • We may collect and derive information that is publicly available on blockchains and associate it with the information we collect through the Services. **2. Data Usage** This section describes the purposes for which we process your Personal Information. We process your Personal Information: **• To perform our contractual obligations to you.** This includes but is not limited to providing you access to the Services; processing customer service requests; performing our contractual obligations to you under our Terms of Service; and providing you with access to the Products and Services you purchase from us. **• For legitimate business interests which outweigh the general privacy rights of individual data subjects.** This includes but is not limited to analyzing and improving our Services and business operations; ensuring the security and availability of the Services; and monitoring use of the Services to prevent fraud or abuse. • To operate, secure, analyze, and improve the Services. This includes linking or associating wallet addresses and related on-chain activity with Network, Device, and Usage Information (such as IP address, device identifiers, and log data) to understand usage, prevent fraud and abuse, investigate suspicious activity, and enhance performance. **• To comply with a legal obligation or requirement.** We use and process your Personal Information when we believe doing so is necessary to comply with laws and regulations, pursuant to a judicial authorization, or to exercise or defend our legal rights or those of a third party. **• With your consent.** We process your Personal Information if we obtained your affirmative consent to such processing, such as to send you information about the Services and other marketing communications that you requested, or to respond to inquiries and questions that you initiated. If we need to process your Personal Information for a purpose other than that for which the information was initially collected, we will provide you with information about that other purpose before we further process your Personal Information. **3. Data Sharing and Disclosure** We may share your Personal Information with third parties: **• With your consent.** We share your Personal Information if you affirmatively consent to it. If we are legally obligated to obtain your consent prior to sharing your Personal Information, we notify you of the specific purpose for which we are obtaining your consent, and we do not share beyond that purpose without notifying you of and obtaining additional consent for further disclosure. **• With third party service providers and agents.** We share Personal Information with a limited number of service providers who process it on our behalf to provide or improve our business functions, and who have agreed to privacy restrictions similar to the ones in our Privacy Policy by making similar commitments. **• For legal disclosure.** We may share your information with third parties when we reasonably believe disclosure is required or permitted in order to comply with a subpoena, court order or other applicable law, regulation or legal process. **• To protect us or others.** We may share your information to the extent we believe that sharing such information is necessary to protect the rights, property, or safety of us, our products or services, our customers, or others. **• As a result of merger or sale of our business.** We may share Personal Information if we are involved in a merger, sale, financing, liquidation, bankruptcy or acquisition of corporate entities or business units. We do not sell any Personal Information for any reason. **4. Data Access and Control** You may access, update, alter, or delete certain Personal Information we have about you by contacting us using the information provided in the “Contact Information” section below. **5. Data Retention** We retain your Personal Information according to applicable laws or regulatory requirements and keep it as long as is necessary to fulfill the purposes described in this Privacy Policy, including related log data such as IP addresses and device identifiers, or for which the personal data was collected. **6. Data Security** While no online service is 100% secure, we work to protect information about you against unauthorized access, use, alteration, or destruction, and take reasonable measures to do so. We monitor our Services for potential vulnerabilities and attacks, and we use a variety of security technologies and organizational procedures to help protect your personal data from unauthorized access, use, or disclosure. We also limit access to your Personal Information to those personnel with a need to know in order to perform job duties for us. **7. Children's Privacy** We do not collect Personal Information about or from persons under the age of thirteen. If you are under the age of thirteen you CANNOT use the Services. **8. Third Party Links** We may provide content on the Services that links to third-party websites. For example, we may post links to our social media profiles so you can find us easily. We do not control, and are not responsible for, third parties’ privacy practices and content. When you click on a link to a third-party site, the third party may collect your personal information, which will be governed by the third party’s privacy policy. Please read the third party’s privacy policy to learn about how they collect and process your personal information. **9. Cookies Policy** Cookies are small text files that are stored in a web browser’s memory. Cookies help us remember your preferences and that you have already logged in, and they help us analyze how you use the Services so we can improve the Services. This Cookies Policy explains how we use cookies and other similar technologies to help us ensure that our Services function properly, prevent fraud and other harm, and analyze and improve the Services in accordance with our Privacy Policy. Any capitalized term used and not otherwise defined below has the meaning assigned to it in the Privacy Policy. *How We Use Cookies* Cookies help us personalize the Services and offer an effective and safe application. We also use cookies and server logs to collect Network and Device Information (including IP address and device identifiers). We update our cookies periodically, but we generally use cookies for the following purposes: **• To operate the Services.** We use cookies for functions such as authentication, fraud prevention and detection, and features and preferences. **• To analyze and improve the Services.** We use cookies to understand how you use the Services so that we can improve your user experience. We may link this information with wallet address(es) and related on-chain activity for the purposes described in this Privacy Policy. *How You Can Manage Cookies* Your web browser may allow you to control the cookies we and other websites set on your computer. Please consult the help section of your web browser for more information on how to delete cookies. However, note that if you choose to delete or disable cookies, we may be unable to provide the Services to you. **10. EU Data Rights** EU residents may have certain rights under applicable data protection laws, including the EU General Data Protection Regulation (GDPR), which include the rights to: | Right to Be Informed | The right to know or be notified about the collection and use of your personal information. | | ---------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | Right to Access | The right to be provided with a copy of your personal information (the right of access). | | Right to Rectification | The right to require us to correct any mistakes in your personal information. | | Right to be Forgotten | The right to require us to delete your personal information—in certain situations | | Right to Restriction of Processing | The right to require us to restrict processing of your personal information—in certain circumstances, e.g., if you contest the accuracy of the data. | | Right to Data Portability | The right to receive the personal information you provided to us, in a structured, commonly used, and machine-readable format and/or transmit that data to a third party—in certain situations. | | Right to Object | The right to object: • At any time to your personal information being processed for direct marketing (including profiling). • In certain other situations to our continued processing of your personal information, e.g., processing. | | Right Not to be Subject to Automated Individual Decision- Making | The right not to be subject to a decision based solely on automated processing (including profiling) that produces legal effects concerning you or similarly significantly affects you. | You may request to exercise any of the rights above by contacting us using the information in the Contact Information section below. We may ask you to provide information to verify your identity and right to access the information in your request. We will consider and act upon any such requests in accordance with applicable data protection laws. *Legal Bases for Processing* The legal bases we rely on for processing your Personal Information are: • To perform a contract, such as to fulfill our obligations under our Terms of Service and to provide the Services; • To comply with a legal obligation, such as to comply with a subpoena or to grant access to personal data in circumstances of high public interest; • For legitimate interests which are not overridden by your data protection interests; and • With your consent. *Processing Special Category Data* To the extent we process special category data, we rely on the legal bases above and the following exemptions: • You have given your explicit consent to process the special category data; • Processing relates to personal information that you manifestly made public; or • Processing is necessary for the establishment, exercise or defence of legal claims or to comply with a judicial order. If you have complaints or disputes about this Privacy Policy or our privacy practices, please contact us using the Contact Information provided below. We will respond to your complaint in the time period required by applicable law. You may also have a right to lodge a complaint with your local data protection authority (DPA). **11. EEA Data Subjects: Transferring Your Personal Information Out of the EEA** To deliver services to you, it is sometimes necessary for us to share your personal information outside the European Economic Area (EEA), e.g.: • With our offices outside the EEA ‍ • With your and our service providers located outside the EEA • If you are based outside the EEA These transfers are subject to special rules under European and UK data protection law. **12. Promotional Communications** You may opt out of receiving promotional communications from Hermetica by following the instructions in those communications or by emailing us at [hello@hermetica.fi](mailto:hello@hermetica.fi?subject=Customer%20support). If you opt out, we may still send you non-promotional emails, such as those about your account or our ongoing business relations. **13. Mobile Push Notifications/Alerts** With your consent, we may send promotional and non-promotional push notifications or alerts to your mobile device. You can deactivate these messages at any time by changing the notification settings on your mobile device. **14. Contact Information** You may update, correct or delete information about you at any time by emailing us at [hello@hermetica.fi](mailto:hello@hermetica.fi?subject=Customer%20support). Please note that we may retain cached or archived copies of information about you for a certain period of time. **15. Changes to this Privacy Policy** We will provide you with notice of changes to the way we process your Personal Information and will obtain your consent as required by applicable law. All changes are effective immediately upon posting a notice of such changes. Your continued access to or use of the Services following the posting of changes constitutes your acknowledgement of such changes. You can see when this Privacy Policy was last updated by checking the “Last Updated” date displayed at the top of this Privacy Policy. # Terms of Service Hermetica Labs Terms of Service Last Updated: July 28, 2025 **Overview** These Terms of Services, together with any documents and additional terms they, by reference, expressly incorporate (collectively, these "Terms"), are entered into between Hermetica Labs, Inc., a corporation registered in the Republic of Panama with the registration number 155736526 (hereinafter referred to as "Hermetica", "we", "our" or "us") and the person making use of Hermetica's services (hereinafter referred to as the "User", "you" or "your"). These Terms constitute a binding legal agreement between Hermetica and the User. Within these Terms, words of any gender shall be held and construed to include any other gender, and words in the singular number shall be held and construed to include the plural unless the context otherwise requires. These Terms and any other terms and conditions incorporated herein by reference govern your access to and use of the Platform and Services. You must read the Terms carefully. By accessing, browsing or otherwise using the Platform or Services, you acknowledge and agree that you have read, understood and accepted all of the Terms and our Privacy Policy (the "Privacy Policy"), which is incorporated by reference into the Terms. BY ACCESSING OR USING THE PLATFORM OR SERVICES, AS DEFINED IN SECTION 1,THE USER ACCEPTS AND AGREES TO BE BOUND BY AND COMPLY WITH THESE TERMS, INCLUDING THE MANDATORY ARBITRATION PROVISION OUTLINED IN SECTION 18. IF THE USER DOES NOT AGREE TO THESE TERMS, SUCH USER SHOULD NOT ACCESS OR USE THE PLATFORM OR SERVICES. PLEASE REVIEW THE DISCLOSURES AND DISCLAIMERS SET FORTH IN SECTION 14 IN THEIR ENTIRETY BEFORE USING ANY SOFTWARE DEVELOPED BY HERMETICA. SECTION 14 PROVIDES IMPORTANT DETAILS ABOUT THE LEGAL OBLIGATIONS ASSOCIATED WITH THE USER'S USE OF THE PLATFORM AND SERVICES. BY ACCESSING OR USING THE PLATFORM OR SERVICES, THE USER AGREES THAT HERMETICA DOES NOT PROVIDE EXECUTION OR CLEARING SERVICES OF ANY KIND AND IS NOT RESPONSIBLE FOR EXECUTING OR CLEARING TRANSACTIONS AUTOMATED THROUGH THE HERMETICA SOFTWARE. **1. Definitions** For the purpose of these Terms, the following capitalized terms shall have the following meanings: 1.1. "Affiliate" means, with respect to a party to these Terms, any legal entity that, directly or indirectly controls, is controlled by or is under common control with Hermetica. 1.2. "Applicable Law" means any domestic or foreign law, rule, statute, regulation, by law, order, protocol, code, decree, or other directives, requirement or guideline, published or in force which applies to or is otherwise intended to govern or regulate any person, property, transaction, activity, event or other matter, including any rule, order, judgment, directive or other requirement or guideline issued by any Governmental Authority having jurisdiction over Hermetica, the User, the Platform or the Services, or as otherwise duly enacted, enforceable by law, the common law or equity. 1.3 “European Union (EU)” means the Member States of the European Union as amended from time to time. 1.4 “European Economic Area (EEA)” means the EU together with Iceland, Liechtenstein, and Norway. 1.5 “Restricted Person” means (a) any person that is located in, resident, domiciled, established, or accessing the Platform or Services from a Restricted Territory; (b) any person listed on, or owned or controlled by a person listed on, any applicable sanctions list; or (c) any person acting on behalf of, or for the benefit of, any of the foregoing. 1.6 "Stacks" means the utility token of the Stacks Blockchain that may be used to purchase computational resources to run decentralized applications or perform actions on the Stacks Blockchain. 1.7 "Stacks Address" means the unique public key cryptocurrency identifier that points to a Stacks-compatible wallet to which Stacks or SIP-010 compatible tokens may be sent or stored. 1.8 "Stacks Blockchain" means the underlying public blockchain infrastructure Hermetica leverages to offer its Services. 1.9 "Governmental Authority" means the applicable domestic or foreign federal, provincial or state, municipal, local or other governmental, regulatory, judicial or administrative authority. 1.10 "Platform" means the Hermetica website and web application located at "hermetica.fi", and all associated sites linked thereto by Hermetica and its Affiliates. 1.11 "Services" The Products offered by Hermetica as accessible through the Platform. 1.12 "Product" means any product offered through the Services and available on thePlatform. **2. Eligible Users** The following are conditions of access to the Platform, and each time you access the Platform, the User represents and warrants to us that: 2.1 The User is an individual that is 18 years of age or older, capable of forming a binding contract with us, and under no legal impediment or incapacity; 2.2 The User is an authorized representative of a company and has the requisite authority from that company to access the Platform and form a binding agreement with us on behalf of that company; 2.3 The User is not and has not been identified as a "Specially Designated National" by the US Office of Foreign Assets Control or otherwise subject to any sanctions or restrictions which may affect our ability to provide the User with our Services; 2.4 The User has the full power and authority to agree to these Terms and to use any Service offered by Hermetica through the Platform; 2.5 The User has read the Risk Sections and these Terms prior to using the Services, and that User is solely responsible for your trading or non-trading actions and has had the opportunity to take any legal, financial, accounting or other advice that User deems appropriate prior to accessing the Platform or using any of the Services; 2.6 The User will only trade with legally obtained digital assets that belong to The User, and that The User has full legal and beneficial title to any such assets at the time The User transfers them to us; 2.7 The User is acting only on their own behalf and not on behalf of any Restricted Person, and the User will not facilitate any Restricted Person’s access to the Platform or Services; 2.8 The User is not located in, or a resident of, any Restricted Territory (as defined below) and has not used any technical means to misrepresent its geographical location to access the Platform from any Restricted Territory; and 2.9 The User is acting for its own account as principal and not as trustee, agent or otherwise on behalf of any other persons. Your access to the Platform and any Services may be restricted based on your jurisdiction or geographical location. You must not use the Protocol if you are located in or a citizen or resident of any state, country, territory or other jurisdiction in which use of the Platform or the Services would be illegal or otherwise violate any applicable law (a "Restricted Territory"). The fact that the Platform is accessible in a Restricted Territory or that the Platform allows the use of the official language of a Restricted Territory or a language commonly used in a Restricted Territory must not be construed as a license to use the Platform in such a Restricted Territory. We unconditionally reserve the right to restrict access to any Restricted Territory and may implement technical controls to prevent access to the Platform or any Services from any Restricted Territory.The access or use of the Platform and Services we offer is prohibited if you are located, incorporated or otherwise established in, or a resident of: (i) The EU or EEA; (ii) Belarus, Crimea, Cuba, Democratic People’s Republic of Korea (DPRK), Democratic Republic of Congo, Donetsk, Iran, Iraq, Lebanon, Libya, Luhansk, Mali, Myanmar, Nicaragua, Republic of Panama, Russia, Somalia, South Sudan, Sudan, Syria, the United States of America; (iii) any other jurisdiction designated as a Restricted Territory on our Platform (as amended from time to time); (iv) a jurisdiction where it would be illegal for you to access or use our Platform or use the Services; or (v) a jurisdiction where it would be illegal for us to provide you access to our Platform or use our services. If you are a resident of or are operating from a Restricted Territory, as defined in these Terms, we have the right to terminate your Account with immediate effect, without us being liable for any damages this might entail. **2A. No Offer or Availability in Restricted Territories** 2A.1 The Platform and Services are not offered to, intended for, or directed at any person in a Restricted Territory, and shall not be construed as an offer or solicitation there. 2A.2 Hermetica may implement IP geofencing, device, payment‑rail, KYC/AML, and other controls and may block or terminate access where Hermetica reasonably believes a user is a Restricted Person. 2A.3 Hermetica does not conduct marketing targeted at Restricted Territories and prohibits onward marketing or distribution of the Services into those jurisdictions. 2A.4 If Hermetica determines you are, or have become, a Restricted Person, Hermetica may suspend or terminate access immediately and you acknowledge that no services, support, onboarding, minting, redemption, or account servicing will be made available to you. **3. Modifications to These Terms** In our sole discretion, we reserve the right to modify these Terms from time to time. If modifications are made, Hermetica will provide the User with notice of such changes by providing a notice through our Services or updating the date at the top of these Terms. Unless we say otherwise in our notice, all such modifications are effective immediately, and your continued use of the Platform and Services after we provide such notice will be construed as your acceptance of the modified Terms. If you do not agree with the modified Terms, your sole remedy is to terminate the use of the Platform and our services. **4. Services** 4.1 Stacks Fees - Hermetica's Services involve the use of the Stacks Blockchain, which requires the payment of a fee for the computational resources required to conduct a transaction on the Stacks Blockchain successfully. You acknowledge and agree that Hermetica has no control over: (1) any Stacks blockchain transactions; (2) The method of payment of any Stacks Fees; and (3) Any actual payments of Stacks Fees. Accordingly, the User must ensure that he has a sufficient balance of Stacks stored at his Stacks Address to complete a Stacks Blockchain transaction. 4.2 Conditions and Restrictions - Hermetica may, at any time and in its sole discretion, restrict the User's access to, or otherwise impose conditions or restrictions upon such User's use of, the Services or the Platform, with or without prior notice. You agree and acknowledge that Hermetica has no obligation to provide information about the reasons for such closure or suspension. 4.3 No Broker, Legal, or Fiduciary Relationship - Hermetica is not the User's broker, lawyer, intermediary, agent, or advisor and has no fiduciary relationship or obligation to the User regarding any other decisions or activities of the User when using the Platform or Services. No communication or information provided by Hermetica to the User is intended or to be construed as legal or financial advice by such User. 4.4 User's Responsibility - As a condition to accessing or using the Platform or Services, the User shall: (a) Only use Hermetica's Platform and or Services for lawful purposes, and in accordance with these Terms; (b) Ensure that, at all times, all information that the User provides on the Platform is current, complete and accurate; and (c) Maintain the security and confidentiality of his Stacks public and private keys. 4.5 Unacceptable Use or Conduct - As a condition for accessing or using the Platform or Services, the User shall not: (a) Violate any Applicable Law, including, without limitation, any relevant and applicable anti-money laundering and anti-terrorist financing laws, each as may be amended from time to time; (b) Infringe on or misappropriate any contract, intellectual property or other third-party rights, or commit acts of tortious liability while using the Platform or Services; (c) Use the Services in any manner that could interfere with, disrupt, negatively affect, or inhibit other users from fully enjoying the Services or that could damage, disable, overburden, or impair the functioning of theServices in any manner; (d) Attempt to circumvent any content filtering mechanisms or security measures that Hermetica employs on the Platform, or attempt to access anyService or area of the Platform or Services that the User is not authorized to access; (e) Use the Services to pay for, support, or otherwise engage in any illegal gambling activities, fraud, money-laundering, terrorist activities, or other illegal activities; (f) Use any robot, spider, crawler, scraper, or other automated means or interface not provided by Hermetica to access the Services or to extract data; (g) Introduce any malware, virus, Trojan horse, worm, logic bomb, drop-dead device, backdoor, shutdown mechanism or other harmful material into the Platform or the Services; (h) Provide false, inaccurate, or misleading information; (i) Post content or communications on, or about, the Platform that are, in our sole discretion, libelous, defamatory, profane, obscene, pornographic, sexually explicit, indecent, lewd, vulgar, suggestive, harassing, hateful, threatening, offensive, discriminatory, bigoted, abusive, inflammatory, fraudulent, deceptive or otherwise objectionable; (j) Post content on, or about, the Platform containing unsolicited promotions, political campaigning, or commercial messages or any chain messages or user content designed to deceive or trick the user of the Service; (k) Use the Platform or Services from a Restricted Territory; (l) Encourage or induce any third party to engage in any activities prohibited under this Section; (m) Use any technical or contractual workaround to defeat geoblocking or other controls, including VPNs/proxies, or assist any third party in doing so; (n) Access on behalf of a Restricted Person or transfer accounts, credentials, or access rights to a Restricted Person. 4.6 Assumption of Risks - The User represents and warrants that Hermetica will have no responsibility or liability for any of the risks mentioned in Sections 5, 6, 7 and 8.The User hereby irrevocably waives, releases and discharges all claims, whether known or unknown, against Hermetica, its affiliates and their respective shareholders, members, directors, officers, employees, agents and representatives related to any of the risks set forth herein. 4.7 User Content - The User hereby grants to Hermetica a royalty-free, fully paid-up, sublicensable, transferable, perpetual, irrevocable, non-exclusive, worldwide license to use, copy, modify, create derivative works of, display, perform, publish and distribute, in any form, medium or manner, any content that is available to other users via thePlatform as a result of the User's use of the Platform (collectively, "User Content"). This includes, without limitation, content for promoting Hermetica (or its Affiliates), the Services or the Platform. The User represents and warrants the following: (a) The User owns his content or has the right to grant the rights and licenses in these Terms; and (b)The User's Content and Hermetica's use of the User Content, as licensed herein, does not violate or infringe on any third party's rights. 4.8 Certain Products available through the Services may be subject to separate product terms. Where applicable, those terms govern the Product and prevail over these Terms in the event of a conflict. For the avoidance of doubt, holding or acquiring any digital asset elsewhere does not grant any right to onboarding, minting, redemption or servicing by Hermetica if you are a Restricted Person. **5. Digital Asset Risks** 5.1 digital assets: Digital asset prices are volatile and fluctuate day to day. Trading in these digital assets may be considered a high-risk activity. Proper diligence and sound judgement should be used in evaluating the risks associated with these activities. We do not solicit nor represent that digital assets are an investment vehicle. The decision to trade digital assets rests entirely on the Users' independent judgement. Any digital asset may decrease in value or lose value due to various factors, including the discovery of wrongful conduct, market manipulation, change to the nature or properties of a digital asset, or governmental or regulatory activity. Demand for digital assets may be partially or wholly driven by speculation or market sentiment. 5.2 Lack of Information available: You may not have full access to all the information relevant to the particular digital asset or its underlying platform or network. It may not be possible to obtain updated information regarding the progress or any changes to particular digital assets or their underlying platforms or network. Many digital asset issuers or operators may also have no operating history or track record that any be used to evaluate the ability to achieve their stated project goals. 5.3 Network Events: Digital assets may be subject to various network events, including forks, airdrops, attacks on the security, integrity or operation of the networks, or network participants making a binding decision in relation to the network underlying a digital asset. Such events may affect the features, functions, operation, use or other properties of any digital asset, network or platform. The events may also severely impact the price or value of any digital assets or even result in the shutdown of the network or platform associated with the digital asset. Such network events may be beyond the control of the User or Hermetica, or to the extent Hermetica has any ability to impact the network event, Hermetica's decision or actions may not be in your interests. Where you transfer digital assets to Hermetica which are the subject of a network event, you may not been titled to the proceeds arising from any network event, and Hermetica is entitled to keep any digital assets created because of network events (for example, in circumstances where there is a fork in the network). The User should not transfer assets to Hermetica, where you wish to receive the benefits of those network events. 5.4 Inflation Risk: digital assets may, either because of the inherent design of the digital asset or through network events, not be a fixed supply of assets. Where additional digital assets are created, the asset's price may decline due to the inflationary effects of adding additional digital assets to the total assets available. 5.5 Concentration Risk: At any point in time, one or more persons may directly or indirectly control significant portions of the total supply of any particular digital asset.Acting individually or in concert, these holders may have significant influence over the digital asset and may be able to influence or cause network events which may have a detrimental effect on the price, value or functionality of the digital assets. Network participants may make decisions which may not be in the User's best interest as a holder of digital assets. 5.6 Suspensions of Trading/Network Events: Under certain conditions, liquidating a position in digital assets may be difficult or impossible. Certain network events(including total failure of a network) may occur rapidly and affect the ability of holders of digital assets to conduct transactions. Information relating to these network events may be difficult to ascertain ahead of time and may be subject to limited oversight by any third party capable of intervening to stabilize the network. **6. Cybersecurity Risks** 6.1 Source code changes and flaws: The various source codes underlying digital assets and smart contracts are subject to change and may at any time contain one or more defects, weaknesses, inconsistencies, errors or bugs. Unless otherwise represented in writing by Hermetica, no audit or investigation has been conducted on any source code developed by parties other than Hermetica. 6.2 Cryptographic advancements: Developments in cryptographic technologies and techniques, including the advancement of artificial intelligence or quantum computing, pose security risks to all cryptography-based systems, including digital assets. Applying these technologies and techniques to digital assets or the Platform and Services may result in theft, loss, disappearance, destruction, devaluation or other compromises of digital assets, the Platform and Services or your data. 6.3 Reliance on the Internet: digital assets and the Platform and Services rely heavily on the Internet. However, the public nature of the Internet means that either part of the Internet or the entire Internet may be unreliable or unavailable at any given time. Further, interruption, delay, corruption or loss of data, the loss of confidentiality in the transmission of data, or the transmission of malware may occur when transmitting data via the Internet. The result of the above may be that your order is not executed according to your instructions or not at all at the desired time. 6.4 Unauthorized access: Unauthorized third parties may use the User wallet and effect transactions without your knowledge or authorization, whether by obtaining control over another device or account used by the User or other methods. 6.5 Loss of Private Key(s): Losing control of your private key(s) may permanently and irreversibly deny you access to your digital assets. Neither Hermetica nor any other person or Affiliate will be able to retrieve or protect digital assets for which you hold the private key(s). IF THE PRIVATE KEY(S) IS LOST, IT MAY BECOME IMPOSSIBLE TO TRANSFER DIGITAL ASSETS TO ANY OTHER ADDRESS OR WALLET, AND YOU ARE SOLELY RESPONSIBLE FOR SECURING YOUR PRIVATE KEY(S) IN A MANNER THAT MEETS THE USER SECURITY CIRCUMSTANCES. 6.6 Operational Risk: Breakdowns or malfunctioning of essential systems and controls, including IT systems or digital asset networks, may generally affect digital assets' value. In particular, digital assets may suffer from a concentration of operational risk during development, including key personnel, governance and financial control risk. **7. Legal Risks** 7.1 Country Risk: If an investment is made in any digital assets issued by a party subject to foreign laws or transactions made on markets in other jurisdictions, including markets formally linked to a domestic market, recovery of the sums invested and any profits or gains may be reduced, delayed or prevented by exchange controls, debt moratorium or other actions imposed by the government or other official bodies. Before you use any Product, you should be familiar with any rules or laws relevant to the Services. Your local regulatory authority will be unable to compel the enforcement of the rules of regulatory authorities or markets in other jurisdictions where your transactions have been effected. You should obtain independent advice about the different types of redress available in both your home jurisdiction and other relevant jurisdictions before you start to trade. If your country of residence imposes restrictions on digital assets, we may be required to discontinue your access to the Platform and Services. We may not be permitted to transfer digital assets held in the Products back to the User or permit the User to transfer digital assets out of the Hermetica Services to the User or others until the regulatory environment permits us to do so. 7.2 Taxation and required reporting to taxation authorities: You are responsible for all taxes in respect of any gains obtained in a Product, including past or retrospective taxes imposed on the Services. Before using any Product, you should understand the tax implications of acquiring, entering into, holding and disposing of a digital asset and aProduct. Tax implications of any Service depend on the nature of your business activities and the Product in question. The User should consult their independent tax advisor to understand the relevant tax considerations. 7.3 Regulatory Uncertainty: The Services are potentially exposed to regulatory/legal risk. The legal and regulatory treatment of digital assets may change. Regulation of digital assets is unsettled and rapidly changing. Legal and regulatory treatment varies according to the jurisdiction. The effect of regulatory legal risk is that any digital asset may decrease in value or lose all of its value due to legal or regulatory change. This may affect the value or potential profit of a Product. Legal changes may make a previously acceptable investment illegal or subject to substantial restrictions that may affect the ability to liquidate a position. Changes to related issues such as taxation may occur and radically affect the value or profitability of a digital asset. Such risk is unpredictable and depends on geopolitical, economic, sovereign and other factors. Risks may be asymmetrical between established and emerging markets and affect some digital assets significantly more than others. The User must obtain independent legal, tax and financial advice and continues to monitor the legal and regulatory position in respect of its use of the Services. 7.4 Legal status of Digital Assets, Services and Platform: The laws of various jurisdictions may apply to digital assets or Services offered through the Hermetica Platform. Applying these laws and regulations to digital assets is largely untested, and laws and regulations are subject to change without prior notice to either Hermetica or the User. In particular, any current governmental or regulatory tolerance of digital assets may change rapidly, and digital assets may at any time be deemed to be a security, investment, asset or money by governmental authorities or regulators, which may affect Hermetica's ability to offer the Services. As a result of regulation and legislation around digital assets, the Platform may not be available in certain jurisdictions or at all. Changes to access to the Platform or the Services may be made unilaterally by Hermetica on short or no notice to the User. Hermetica may receive formal or informal queries, notices, requests or warnings by governmental authorities and regulators. Governmental authorities and regulators may take action against Hermetica. As a result of such events, Hermetica may be required to discontinue the Platform or Services. The User may also be subject to governmental or regulatory action by holding digital assets or using the Hermetica Platform and Services. The User should take independent legal advice to evaluate the consequences of using the Services before accepting these Terms or using the Services. **8. General Risks** 8.1 Suitability: You should decide to use any Service provided by Hermetica only after due and careful consideration. You should determine whether a Product is appropriate in light of your experience in similar transactions, your objectives in engaging with Hermetica, financial resources and other relevant circumstances. If you are unsure that the Product is suitable, you should obtain independent legal, tax or financial advice. 8.2 Fees: You acknowledge and agree that fees may apply when you use the Platform. Depending on the type of Product purchased on our Platform, we may charge a transaction or other fee, which may be deducted from or added to the value of the Product. The applicable fees for Products and Services may be amended from time to time and are available on the Platform. You must review all fees carefully before using the Services or Platform. 8.3 Not a Research Report: Any content provided by Hermetica does not purport to be, and is not intended to be, a "research report" or "investment research". 8.4 Commercial Arrangements: Hermetica may have a relationship with other entities which may not be disclosed to you. **9. Privacy** Please refer to Hermetica's privacy policy at [https://hermetica.fi/privacy](https://www.hermetica.fi/privacy) for information about how Hermetica collects, stores, and processes information about the User. **10. Proprietary Rights** 10.1 Intellectual Property Rights Ownership: Hermetica owns all intellectual property and other rights in and to the Platform and Services, together with their contents, including, but not limited to, software, text, images, trademarks, service marks, copyrights, patents, and designs. Unless expressly authorized by Hermetica, the User may not copy, modify, adapt, rent, license, sell, publish, distribute, or otherwise permit any third party to access or use the Platform with its contents. Accessing or using thePlatform or Services does not constitute a grant to you of any proprietary intellectual property or other rights in the Interface or its contents. 10.2 Trademarks: Any of Hermetica's names, logos, and other marks used in the Platform or as a part of the Services, including Hermetica's name and logo, are trademarks owned by Hermetica, its Affiliates, or its applicable licensors. You may not copy, imitate, or use such Trademarks without Hermetica's (or the applicable licensor's) prior written consent. 10.3 License: Subject to your strict compliance with these Terms, you are granted a non-exclusive, non-sublicensable and non-transferable right to access and use the Platform, Services and all materials made available on the Platform for your own personal use and to the extent required for your use of our services only. **11. Changes, Suspension and Termination** 11.1 Changes to Services: Hermetica may, in its sole discretion, from time to time and with or without prior notice to the User, modify, suspend or disable, temporarily or permanently, the Platform or the Services, in whole or in part, for any reason whatsoever, including, but not limited to, as a result of a security incident. 11.2 No Liability: Hermetica will not be liable for any losses suffered by the User resulting from any modification to the Platform or any Services or from any suspension or termination, for any reason, of your access to all or any portion of Hermetica's Platform or Services. 11.3 Survival: These Terms will survive any termination of your access to Hermetica's Platform or Services, regardless of the reasons for its expiration or termination, in addition to any other provision which by law or by its nature should survive. **12. Electronic Notices** The User consents to receive all communications, agreements, documents, receipts, notices, and disclosures electronically (collectively, our "Communications") that Hermetica provides in connection with these Terms or any Services. The User agrees that Hermetica may provide Communications to him by posting them on the Platform orby emailing them to the User at the email address provided in connection with the User's use of the Services if any. The User should maintain copies of Hermetica's Communications by printing a paper copy or saving an electronic copy. The User may also contact Hermetica's support team to request additional electronic copies of Communications by filing a support request at [hello@hermetica.fi.](mailto:hello@hermetica.fi?subject=Customer%20support) **13. Indemnification** The User will defend, indemnify, and hold harmless Hermetica, its Affiliates, and its Affiliates' respective shareholders, members, directors, officers, employees, attorneys, agents, representatives, suppliers, and contractors (collectively, "Indemnified Parties") from any claim, demand, lawsuit, action, proceeding, investigation, liability, damage, loss, cost, or expense, including without limitation reasonable attorneys' fees, arising out of or relating to: (a) The User's use of, or conduct in connection with, the Platform or the Services; (b) Stacks Blockchain assets associated with the User's Stacks Address; (c) Any feedback or user content the User provides to the Platform if any; (d) The User's violation of these Terms; or (e) The User's infringement or misappropriation of the rights of any other person or entity. If the User is obliged to indemnify any Indemnified Party, Hermetica (or, at its discretion, the applicable Indemnified Party) will have the right, in its sole discretion, to control any action or proceeding and to determine whether Hermetica wishes to settle, and if so, on what terms. **14. Disclosures and Disclaimers** The Platform and the Services are provided on an "as is" and "as available" basis. The Indemnified Parties make no guarantees in connection with the Platform or the Services. To the maximum extent permitted under applicable law, the Indemnified Parties disclaim all warranties and conditions, whether express or implied, of merchantability, fitness for a particular purpose, or non-infringement and disclaim all responsibility and liability for: (1) The Platform or the Services is accurate, complete, current, reliable, uninterrupted, timely, secure, or error-free. Information (including, without limitation, the value or outcome of any transaction) available through the Platform is provided for general information only and should not be relied upon or used as the sole basis for making decisions. Any reliance on the Services is at your own risk; (2) You expressly acknowledge, understand, and agree that the Services may contain audio-visual effects, strobe lights or other materials that may affect your physical senses or physical condition. (3) The User expressly acknowledges that the Indemnified Parties are not liable for loss or damage caused by another User's conduct, unauthorized actors, or any unauthorized access to or use of the Platform or Services; and (4) Viruses, worms, trojan horses, time bombs, cancelbots, spiders, malware, or other types of malicious code that may be used to affect the functionality or operation of the Platform or Services. **15. Limitation of Liability** The Indemnified Parties shall, in no event, be liable for any incidental, indirect, special, punitive, consequential or similar damages or liabilities whatsoever (including, without limitation, damages for loss of data, information, revenue, goodwill, profits, or other business or financial benefit) arising out of or in connection with the Platform and the Services (and any of their content and functionality), any execution or settlement of a transaction, any performance or nonperformance of the Services, the User's Stacks, Product outcome, Service or other item provided by or on behalf of Hermetica, whether under contract, tort (including negligence), civil liability, statute, strict liability, breach of warranties, or under any other theory of liability, and whether or not Hermetica has been advised of, knew of or should have known of the possibility of such damages and notwithstanding any failure of the essential purpose of these Terms or any limited remedy hereunder. This limitation of liability shall apply to the fullest extent permitted bylaw. **16. Release of Claims** You expressly agree that you assume all risks concerning your access to and use of Hermetica's Platform or Services. Additionally, you expressly waive and release us from any liability, claims, causes of action, or damages arising from or in any way relating to your access to and use of the Platform or Services. **17. Third-Party Resources and Promotions** Hermetica's Platform or Services may contain references or links to third-party resources, including, but not limited to, information, materials, products, or services that we do not own or control. In addition, third parties may offer promotions related to your access and use of the Platform or Services. We do not endorse or assume responsibility for such resources or promotions. If you access any such resources or participate in such promotions, you do so at your own risk, and you understand that the Terms do not apply to your dealings or relationships with any third parties. You expressly relieve us of any liability arising from your use of any such resources or participation in any such promotions. **18. Governing Law and Dispute Resolution** These Terms shall be governed by, and construed in accordance with, the laws of the Republic of Panama. We will use our best efforts to resolve potential disputes through informal, good-faith negotiations. If a potential dispute arises, you must first contact us by email at [hello@hermetica.fi](mailto:hello@hermetica.fi?subject=Customer%20support) so we can attempt to resolve it without resorting to formal dispute resolution. If we cannot reach an informal resolution within 60 days of your notification of the claim or dispute, then you and Hermetica agree that any unresolved dispute after the negotiation period shall be settled by arbitration under the rules outlined below. This arbitration agreement shall be governed by the laws of the Republic of Panama; The seat of arbitration will be in Panama. The number of arbitrators will be one, and that arbitrator must have relevant legal and technological expertise. The language of the arbitration shall be English. The decision of the arbitrator shall be in writing with written findings of fact and shall be final and binding on the parties. Each party shall bear its own costs relating to the arbitration proceedings irrespective of its outcome. This section provides the sole recourse for the settlement of any disputes arising out of, in connection with, or related to your use of the Platform or Services. Notwithstanding any other provision of these Terms, you agree that Hermetica has the right to apply for injunctive remedies (or an equivalent type of urgent legal relief) in any jurisdiction. **19. Entire Agreement** The Terms, including the Privacy Policy, constitute the entire agreement between the User and Hermetica with respect to the subject matter hereof. The Terms, including the Privacy Policy, supersede any prior or contemporaneous written or oral agreements, communications and other understandings relating to the subject matter of the Terms. **20. Force Majeure** Any event beyond our reasonable control, such as – but not limited to – flood, extraordinary weather conditions, earthquake, or any other Act of God, fire, war, insurrection, riot, labour dispute, accident, the action of government, failure of our suppliers to comply with their obligations, a communications failure (including internet), power failure, or equipment or software malfunction shall qualify as a “Force Majeure Event”. Hermetica shall not be liable for any non-performance of an obligation under these Terms or for disruptions in your use of the Platform and Services that is the result of a Force Majeure Event. # Risk Disclosure Please consider information in this Risk Disclosure Statement (“Statement”) as a general overview of the risks associated with the services offered by Hermetica Labs and its affiliates (the “Services”) made for your awareness only. We do not intend to provide investment or legal advice through this Statement and make no representation that the Services described herein are suitable for you or that information contained herein is reliable, accurate or complete. We do not guarantee or make any representations or assume any liability regarding financial results based on the use of the information in this Statement, and further do not advise to rely on such information in the process of making a fully informed decision whether or not to use the Services. The risks outlined in this Statement are not exhaustive and this Statement only outlines the general nature of certain risks associated with crypto assets, and does not discuss in detail all risks associated with holding or trading crypto assets. Users should undertake their own assessment as to the suitability of using crypto assets and associated Services based on their own investigations, research and based on their experience, financial resources, and goals. You should not deal with crypto assets unless you understand their nature and the extent of your exposure to risk. Note that specific disclosures and terms of service will apply with respect to various offerings of Hermetica Labs, which will be published separately. Users should refer to those terms in addition to the disclosures herein when deciding whether to utilize the Services. For the purpose of this Statement “you”, “your”, and “User” mean a user of our services and “we”, “us”, “our”, or “Hermetica”, mean Hermetica Labs, Inc. Users are strongly advised to read this Risk Disclosure Statement carefully before deciding to start using the Services. RISK OF LOSS IN TRADING CRYPTO ASSETS CAN BE SUBSTANTIAL AND YOU SHOULD, THEREFORE, CAREFULLY CONSIDER WHETHER SUCH ACTIVITY IS APPROPRIATE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD BE AWARE OF THE FOLLOWING: **Crypto Assets Are Not Legal Tender In Most Jurisdictions** Most crypto assets are not backed by any central government or legal tender (except in few, discrete cases), meaning each country has different standards. There is no assurance that a person who accepts crypto assets as payment today will continue to do so in the future. Holders of crypto assets put their trust in a digital, decentralized, and partially anonymous system that relies on peer-to-peer networks and cryptography to maintain its integrity, and neither vendors nor individuals have an obligation to accept crypto assets as payment in the future; **Loss of value, Volatility and Uncertainty of Future Performance** There is typically limited or no fundamental reasoning behind the pricing of crypto assets, creating the risk of volatility and unpredictability in the price of crypto assets relative to fiat currencies. Crypto assets have had historically higher price volatility than fiat currencies, including irrational and extreme moves in price as the process for valuation can be speculative and uncertain. **Liquidity Risk** Crypto assets can have limited liquidity that can make it difficult or impossible to sell or exit a position when desired. This can occur at any time, especially during periods of high volatility. **Market forces** Trading in crypto assets may be susceptible to irrational market forces, such as speculative bubbles, manipulation, scams, and fraud. **Financial Crime and Cyber Attacks** Cyber crime relating to crypto assets can be more prevalent than other financial crime as the ecosystem is totally digital and traditional governance and risk mitigants may be lacking. For example, a 51% attack is an attack on a blockchain by any person or group of persons who control more than 50% of the network. Attackers with majority control of a network can interrupt the recording of new blocks, alter payment history, and subvert funds. Users are susceptible to malware and fake/hijacked addresses and other forms of cyber-attacks and Users should always take care of passwords and double check the addresses and URLs before loading software or interacting with any platform, protocol, or service. **Absence of Control** Hermetica is not a broker, agent or advisor and has no fiduciary relationship or obligation to Users in connection with any transaction or other decision or activity undertaken by you using the Services. We do not control whether your use of the Services is consistent with your financial goals. It is up to Users to assess whether their financial resources are appropriate for their respective activity with us and risk appetite in the products and services you use. **Availability of Services** We do not guarantee that the Services will be available at any given time or that the Services will not be subject to unplanned service interruptions or network congestion. You may not be able to buy, sell, store, transfer, redeem, send, or receive crypto assets when you want to. **Technology Risk** The risks of crypto assets being transacted via new technologies (including distributed ledger technologies) include, among other things, anonymity, irreversibility of transactions, accidental transactions, transaction recording, and settlement. Transactions in crypto assets on a blockchain relies on the proper functioning of complex software, which exacerbates the risk of access to or use of crypto assets being impaired or prevented. Moreover, there is risk of failures, defects, hacks, exploits, protocol errors, or unforeseen circumstances that might occur in connection with a crypto asset or the technologies on which the crypto asset is based. **Irreversible Transactions** Transactions in crypto assets are generally irreversible. As a result, losses due to fraudulent or accidental transactions may not be recoverable. **Third Party Risk** Third parties such as payment providers, custodians, exchanges, and banking partners may be involved in the provision of the Services. You may be subject to the terms and conditions of these third parties, and Hermetica cannot be responsible for any losses these third parties may cause you. **Taxation and Disclosure of Information** You are responsible for determining the taxes to which you may be subject and their application when using the Services. It is your responsibility to report and pay any taxes that may arise from transactions and you acknowledge that Hermetica does not provide legal or tax advice regarding such transactions. If you have concerns about your tax treatment or obligations you may wish to seek independent advice. You understand that when, where, and as required by applicable law, Hermetica will disclose available information relating to transactions transfers, distributions or payments to the appropriate regulatory and tax authorities or other public authorities. Similarly, when, where and as required by applicable law, Hermetica will withhold taxes related to your transactions, transfers, distributions or payments. **No Investment and Legal Advice** Communications or information provided by Hermetica shall not be considered or construed as investment advice, financial advice, trading advice, or any other type of advice. The User is the only party who can determine whether an investment, investment strategy or related transaction is appropriate based on his or her personal investment objectives, financial situation and risk tolerance, and shall be solely responsible for any losses or liabilities that may result. **Regulatory Risk** The regulation of crypto assets and platforms is uncertain in many jurisdictions and Hermetica cannot be held responsible for compliance with legal rules of countries from which customers, on their own initiative, access the Services. Moreover, changes in rules applicable to crypto assets may considerably impact on the prices of those assets and are unpredictable. You further acknowledge the above list of risks is non- exhaustive and there may also be unpredictable risks.