A Bitcoin holder who needs dollars can borrow stablecoins against their BTC without selling it or giving up custody. They lock their Bitcoin in a vault on Bitcoin L1 and receive digital dollars through an integrated payment flow. The vault is governed by Bitcoin Script, so the BTC can only ever be redeemed or liquidated and not rehypothecated or moved to another address. This is helpful because most Bitcoin sits idle. Holders want dollar liquidity but often will not hand their BTC to a custodian to get it. Ducat lets them reach stablecoins while their collateral stays on Bitcoin the entire time. When the loan is repaid, the BTC is released in a single Bitcoin block with no withdrawal queue. The result is a direct, non-custodial path from Bitcoin collateral to stablecoin liquidity - bringing otherwise dormant Bitcoin into the stablecoin ecosystem and giving borrowers immediate access to the payments, off-ramps, and DeFi rails already built on stablecoins.
A Bitcoin L1-native credit and stablecoin protocol enabling BTC holders to borrow stablecoins against their Bitcoin without giving up custody, with every loan enforced on Bitcoin itself.
Ducat is a Bitcoin L1-native credit and stablecoin protocol backed by Hivemind Capital, CMS, UTXO Management, and Echo.
Ducat enables BTC holders to borrow dollars against their Bitcoin without selling or giving up custody, choosing their denomination at the start - either digital dollars or Ducat's Bitcoin-native stablecoin.
Only about 1% of the more than $1T of circulating Bitcoin is productive because existing options ask holders to wrap their BTC, bridge it, or hand it to a custodian. Most Bitcoiners will not do that. Ducat removes the trade-off. BTC is locked in a 2-of-2 Taproot vault on Bitcoin L1 with two Script-enforced outcomes: redemption or permissionless liquidation. The collateral cannot be rehypothecated, moved to an arbitrary address, or seized. Repay the loan and the BTC is released in a single Bitcoin block with no withdrawal queue.
Ducat is built on Bitcoin Script and Taproot, with a custom Chainlink oracle and a FROST threshold-signature Guardian network. A loan is only as secure as the system that enforces it, and Ducat runs on Bitcoin.
Key Terms:
- 160% Minimum Collateralization
- 135% Liquidation Threshold
- 1% Origination Fee (no ongoing interest)
- One-Block BTC Redemption
Stablecoins sit at the center of the dollar experience. A borrower who chooses stablecoins receives them through an integrated payment flow without having to directly handle the underlying mechanics. This gives Bitcoin holders a direct, non-custodial path from BTC collateral to stablecoin liquidity and connects idle Bitcoin to the stablecoin ecosystem and the payment, off-ramp, and DeFi rails built around it.
Use Cases
Anyone can act as a liquidator on Ducat: when a vault's collateral falls below its threshold, a liquidator steps in, repays the debt, and claims the underlying BTC at a discount. The process is permissionless and open to any participant on the network. This is helpful because it gives Bitcoiners a way to earn yield denominated in BTC without leaving Bitcoin, wrapping their coins, or lending to a custodian. Most Bitcoin yield today depends on counterparties or off-chain platforms. Here, the opportunity comes from onchain liquidations enforced by Bitcoin Script with no trust in a third party. It also keeps the system healthy. Permissionless liquidations clear undercollateralized positions quickly, help protect the peg, and keep the protocol solvent without relying on a single backstop. Bitcoin's volatility, usually treated as pure risk, becomes a market that liquidators can take part in.
Funds, corporates, and miners holding Bitcoin often need dollar liquidity but don't want to sell their BTC. With Ducat, they can borrow stablecoins against their treasury directly on Bitcoin L1. The collateral stays in a Script-enforced vault and can only be redeemed or liquidated - not rehypothecated or moved by any third party. This is helpful because institutions typically hold Bitcoin precisely to avoid counterparty and custody risk, and most credit options ask them to give that up. Ducat lets them access stablecoin liquidity while their Bitcoin never leaves the base layer. Every vault action publishes structured metadata to Bitcoin, so positions, debt, and liquidations are independently verifiable by anyone running a validator - giving treasury and compliance teams a complete, auditable record on Bitcoin itself. Rules are also deterministic and defined onchain, so institutions can model how a vault behaves in any price environment and integrate it with standard Taproot custody.
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