Stargate Deployment on Hedera

Executive Summary

This post, presented by The HBAR Foundation, outlines our proposal for Stargate V2 to launch a hUSDC pool on Hedera and builds upon the LayerZero endpoint deployed on Hedera in October 2024. hUSDC is the native USDC asset issued by Circle on Hedera. It also outlines the benefits, mechanics, and strategic value of this integration.

A Mutually Beneficial Partnership The integration would deliver value to both Stargate and Hedera ecosystems.

1. Connect liquidity sources from Stargate’s ecosystem to real-world use cases on Hedera
2. Create institutional and RWA opportunities for the Stargate ecosystem. RWA and institutional DeFi opportunities include Archax tokenization Hedera and HBAR ETF filed by Canary Capital.
3. Increase liquidity on Hedera from the Stargate ecosystem, primarily around USDC
4. Hedera attracts major consumer, sports and entertainment brands, like Karate Combat, FIFA, and BBC Studios - integrating with Stargate enables new cross-chain experiences, driving further adoption among these brands and communities.

The Hedera Network At A Glance

Hedera is an open source decentralized public network governed by a council of globally recognized organizations offering high scalability, sustainability, and a predictable fee structure to build web3 applications and economies at scale. Specifically, Hedera (and its native token, HBAR) offers differentiating features:

1. Adoption By Renowned Global Corporations

• Google
• IBM
• Dell
• LG
• Hitachi
• Nomura
• Mondelez
• Chainlink
• Bitgo
• More Global Leaders

2. Fixed, low transaction fees ($0.0001), no surge pricing
3. High network scalability and maximum extractable value (MEV) resilient
4. Industry-leading transaction speed (10,000+ TPS) and fast finality (2.9 seconds)
5. Multi-Language Programmability

• Java and JavaScript
• C++
• Python
• Solidity (EVM compatible)

The Hedera network is both enterprise and consumer-grade, bringing the stability and cost efficiency needed for large B2B and B2B2C applications and use cases.

PROPOSAL DETAILS

Expansion Proposal

Expand support of Stargate v2 to include the Hedera network and hUSDC, the USDC asset issued natively by Circle on Hedera.

Liquidity Mechanics And Timing

1. Liquidity Support

The HBAR Foundation will allocate up to $500K in HBAR tokens to be used as incentives in Hedera-native hUSDC pool/pathway.

Distribution: Two equal tranches of $250K:

• Tranche One: When Stargate launches on Hedera
• Tranche Two: Within 6-8 months of launch

Duration: $500K in HBAR tokens is expected to last ~2.5 years.

• The HBAR Foundation will look to revisit additional support as incentives are depleted

2. Ecosystem Liquidity Bootstrap

The Hedera ecosystem will bootstrap initial liquidity for hUSDC, with an initial projected liquidity seed of $250,000.

Strategic Rationale

This integration initiative has been strongly motivated by robust development, strategic planning, and verifiable growth and engagement across the Hedera ecosystem:

DeFi Hedera’s ecosystem has demonstrated strong performance with significant growth in Total Value Locked (TVL), user base, and transaction throughput, as evidenced by Messari Q2 data and the success of the SaucerSwap DEX and liquid staking from Stader, along with a flourishing ecosystem of critical applications including:

1. Wallets

• HashPack: Largest overall user base; Launched its own token, staking, and NFTs
• Blade: Powers Hedera’s most used retail app (Karate Combat); Extensive suite of developer tools
• Kabila: Largest user base in Spanish-speaking markets; Launched ‘Plazas’ platform to scale and engage creator economies

2. DEXs

• Saucerswap
• Heliswap

3. Oracles

• Chainlink
• Pyth
• Supra

4. Lending Protocols

• Bonzo
• HLiquity
• Sirio

5. Liquid Staking

• Stader

Native USDC on Hedera The launch of native USDC on the Hedera Network has created a foundation for enhanced DeFi activities within the HBAR ecosystem. It offers a battle-tested and efficient stablecoin option for users and developers. With a fixed fee of $0.0001, hUSDC on Hedera is a cost efficient asset for payments, high speed trading, treasury management, etc.

RWA Leadership - Ecosystem Hedera has established itself as a leader in onchain finance, catering to both retail and institutional clients. This includes significant volumes to come and past successes such as the tokenization of Aberdeen and Blackrock Money Market shares by Archax, and the growth of RWA projects like Redswan Commercial Real Estate.

RWA Leadership - Open Source Product Launches Asset issuers have identified Hedera-based assets as an optimal means of payment/trading into first and secondary markets for RWAs tokenized on Hedera.

This is because of both the network’s underlying tech stack and development of all-in-one tool kits and SDK products that help ensure fast, secure, reliable, and compliant transactions everywhere in the world.

The Hedera Stablecoin Studio and Asset Tokenization Studio.

Sustainability and Climate Markets The open-source Hedera Guardian is a leading platform for climate-related initiatives, with carbon market and energy leaders like Allcot, Blockchain For Energy, Deloitte, DOVU, EDF Officiel, and Tolam Earth building on it. This aligns with Hedera’s strong focus on sustainability and positions it as the go-to network for climate-conscious blockchain projects.

Upcoming Strategic Opportunities Across The Hedera Ecosystem

The following four opportunity areas are where we anticipate to see key wins in the coming year and demonstrate growth potential for the Hedera and Stargate ecosystems in mainstream tokenization and Web3 adoption.

1. Increased carbon credit onboarding and trading
2. Continued growth in Hedera’s DeFi ecosystem with lending protocols
3. Additional institutional tokenization, including tokenization of money market funds as collateral for stablecoin issuance
4. User friendly games associated with streaming media content

Potential Future Opportunities

Though not included in this particular proposal, we see future opportunity in increased demand for cross-chain liquidity with the growth of RWAs and NFTs on Hedera and exploration of both Hedera Token Service (HTS) support of the OFT standard. Hedera has also seen an increase in institutional interest, as demonstrated by Canary Capital’s HBAR spot ETF.

Conclusion

The integration of Hedera with Stargate V2 represents a consequential opportunity for both ecosystems to leverage each other’s strengths and drive growth.

By combining Hedera’s highly scalable infrastructure and institutional focus with Stargate’s cross-chain liquidity layer, we aim to create a thriving, interconnected ecosystem that benefits all stakeholders.

We invite the Stargate and Hedera communities to contribute in shaping the future of cross-chain liquidity and interoperability by supporting this initiative.