The Ducat Protocol

The Ducat Protocol governs the issuance and redemption of UNIT Bitcoin-Collateralised Debt Positions (BCDPs).

Its governance token, DUCAT, is a Bitcoin-native asset issued as a Bitcoin Rune. Governance is enabled through a consensus mechanism based on ordinal inscriptions, enforced by a multi-party computation (MPC) network and validated by Ducat Nodes.

Why Ducat?

A truly decentralised economy has always required truly decentralised money, which, in turn, depends on decentralised, native collateral.

Today, the stablecoin market exists almost entirely on the Ethereum and Tron blockchain networks. Collateral typically takes the form of bank-custodied US Treasuries (USDT, USDC), a mix of Treasuries, Ethereum, and bridged BTC under highly centralised management (DAI), or CEX-custodied perpetual basis trading positions under similarly centralised control (Ethena and others).

All of these models share high exposure to centralised custodians and therefore unlimited regulatory liability, as well as varying degrees of internal control and principal–agent risk.

The Ducat Protocol leverages major advances in Bitcoin programmability, enabling BTC-native, permissionless smart contracts for the first time. The time has finally come for a BTC-native, decentralised unit of stable account that combines Bitcoin’s censorship resistance with robust exogenous collateralisation and a responsible degree of capital efficiency.

As Bitcoin programmability reaches liftoff, the BTC-Fi total value locked (TVL) continues to expand. However, Bitcoin urgently needs liquidity solutions — namely, stablecoins and Collateralised Debt Positions (CDPs) — whose collateral management is responsible, decentralised, and conservative all at once.

Why Now?

Due to historical programmatic constraints, the BTC economy has existed in extreme isolation from the broader financial system. Just 1% of BTC is held in multi-signature bridges, and centralised exchanges hold around 10%. That means 89% of BTC has avoided proof-of-stake DeFi and any form of leverage, illustrating Bitcoin holders’ unique preference for self-custodial maximalism.

However, the current stablecoin market is dominated by highly centralised models. Tether, Circle, and Ethena rely on custodians, opaque collateral, and off-chain control, leaving them exposed to regulatory risk and censorship. MakerDAO initially offered a decentralised alternative but has since drifted toward centralisation through its collateral choices and governance structure. This leaves a clear gap in the market for a truly decentralised, self-custodied stablecoin — one that aligns with the ethos of Bitcoin itself.

An estimated 89% of BTC — roughly $1.9 trillion in market cap — remains completely unused and unleveraged. This presents a huge opportunity to offer BTC-native leverage to that capital base.

We know the stablecoin market doesn’t need more competitors in offshore tokenised Treasuries (USDT), onshore tokenised Treasuries (USDC), or tokenised, CEX-custodied perpetual basis trading (Ethena and others). The centralised custody of collateral inherent in these models undermines everything that makes Bitcoin unique. We also know that large BTC holders place extremely high value on self-custody. For this reason, we believe that traditional stablecoin collateralisation models — all of which reject self-custody — will prove incompatible with the preferences of BTC users.

BTC cannot be bridged to other, more programmable chains without forfeiting self-custody. Historically, Bitcoin holders faced a binary trade-off: either integrate their BTC into the wider economy or maintain sovereign custody. That era is now behind us.

Eligible Collateral

BTC is the only eligible collateral for borrowing. Since our product is built on Bitcoin Layer 1, this is a natural choice. In addition to being unseizable and provably decentralised, BTC outperforms all other cryptocurrencies across every relevant volatility and liquidity metric — including order book depth, market capitalisation, price stability, historical track record, institutional and regulatory acceptance, and brand recognition.

Why USD?

Based on our own experience and research, the only stablecoin product–market fit is USD-based. The US dollar accounts for over 99% of stablecoin market share. Moreover, the BTC economy does not need another attempt to reinvent the wheel by replicating the USD’s extensive real-world integrations with businesses and consumers. What it does need is a flexible, credible unit of stable account to facilitate the flow of funds between BTC-denominated assets and USD-denominated costs and liabilities.