Architecture
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The Ducat protocol architecture can be broken down into the following diagram that show cases the steps that happen when a user attempts to borrow UNIT.
The Guardian network does not, in any way, custody or control the user’s collateralised BTC, it simply acts as a backstop mechanism to ensure protocol rules are being followed.
The MPC network acts as a distributed co-signer, which aims to solve the liveness problem of a pure p2p network, which validates transactions for vault operations; co-signs outputs alongside user signatures; manages rune distributions between network and user UTXOs; verifies that collateral ratios stay above agreed-upon thresholds; ensures burning of repaid UNIT tokens; and validates transaction ordering and compliance with protocol standards. In theory the protocol could be repurposed as a full p2p network with no need for the guardian network.
