Ducat Protocol

Ducat is a Bitcoin L1-native credit and stablecoin protocol. It lets BTC holders borrow dollar-pegged stablecoins (UNIT or USDC) against their Bitcoin without surrendering custody. All loan logic, including vaults, liquidations, and redemptions, is enforced by Bitcoin transactions and Script. No L2s, no bridges, no external chains.

Your BTC is locked in a 2-of-2 Taproot multisig vault: one key is yours, one belongs to a Guardian group (an 11-of-15 MPC threshold network). Neither side can move funds alone. The vault can only be spent in two ways: you repay and redeem your BTC, or the vault is liquidated because collateral dropped below 135%.

UNIT is a dollar-pegged stablecoin issued natively on Bitcoin L1 using the Runes token standard. It is backed by overcollateralised BTC locked in vaults and soft-pegged to USD in the $1.01 to $1.04 range.

Yes. When you choose to borrow USDC, Ducat mints UNIT behind the scenes and converts it 1:1 to USDC via the Circle SDK. You receive USDC directly without needing to interact with UNIT at all.

No. Ducat charges a one-time 7% Minting Service Charge when new UNIT is minted. The charge attaches to the minting event, not to the loan over time. There is no ongoing interest, no compounding, and no hidden charges. Repay your debt any time and redeem your BTC in a single Bitcoin block.

Selling BTC means giving up your position. Borrowing lets you access dollar liquidity while keeping full exposure to BTC. When you are ready, repay the loan and get your Bitcoin back. No taxable sale event, no lost upside.

If BTC drops and your vault's collateralisation falls below 135%, the vault becomes eligible for liquidation. The exact BTC price that triggers this is calculated and locked at the time you open the vault, recorded on-chain so you always know your liquidation price.

Keep your collateralisation ratio well above the 135% liquidation threshold. You can deposit additional BTC into your vault or repay some of your outstanding debt. The Ducat dashboard shows your real-time health factor and liquidation price.

The main risks are BTC price volatility (which can trigger liquidation), potential oracle or Guardian failure (mitigated by secondary price feeds and threshold signing), and general software risk as Ducat is experimental protocol software under active development. Ducat is not available to residents of North Korea, Iran, Russia, Belarus, mainland China, Cuba, Myanmar, Crimea, Donetsk or Luhansk.

If the Chainlink oracle goes down, no new borrows or liquidations can occur, but your BTC remains safe in its vault. Ducat is integrating backup oracles for redundancy. If the website goes down, the front end is open-source with community mirrors, and the protocol continues operating via independent validators and Guardians on Bitcoin L1.