Ducat Protocol explained

Ducat Protocol is a Bitcoin-native credit and stablecoin protocol. It lets a holder borrow dollars against BTC without handing the coins to a lender or custodian, and everything stays on Bitcoin L1.

How a loan works

• BTC is locked in a 2-of-2 Taproot vault, so no single party can move the funds.
• The borrower picks a collateral ratio and can borrow up to 62.5% of the vault's BTC value.
• Loans carry a one-time 7% minting service charge and no ongoing interest.
• Repaying the loan redeems the BTC, and redemption can settle in a single Bitcoin block.

Why it is different

There are no sidechains, bridges or wrapped tokens. Vault custody and liquidation rules are enforced by Bitcoin Script, and every vault and loan term is recorded on Bitcoin, so anyone can run a validator and verify the protocol state.

Liquidations

When a vault falls below the 135% collateral threshold, the protocol sells it to the first user willing to recapitalise the BTC deficit.

Read the full details on the official Ducat Protocol website.

Written by Owen Latimer. Not financial advice.