# Asset Management

All stablecoins issued by a Ducat vault must be backed by at least 160% Bitcoin collateral. However, due to limitations in Bitcoin’s current scripting capabilities, this level of collateralisation cannot be enforced purely within Bitcoin itself.

### Limitations of Bitcoin

* No transaction introspection: Bitcoin cannot inspect transaction details at execution time, making real-time collateral verification impossible at the base layer.
* Lack of complex arithmetic: Opcodes like OP\_MUL and OP\_DIV are not supported, as they were removed by Satoshi alongside other non-standard operations.

As a result, the logic required to track the relationship between locked BTC and issued UNIT must be enforced off-chain.

### The MPC System Solution

To overcome these limitations, Ducat uses a Multiparty Computation (MPC) system. It is operated by independent participants external to the protocol. Their responsibilities include:

* Custodying a share of the FROST key: Each actor holds a portion of the key required to co-sign vault transactions.
* Processing user requests: Ensuring that every transaction complies with protocol rules as defined in the Master Canonical Reference Set (CRS).

### The 2-of-2 Multisig Structure

All BTC collateral is secured using a 2-of-2 multisig scheme:

* Key 1: Held by the user
* Key 2: Distributed across the FROST-based MPC network

### Benefits of Scriptless Multisig via FROST

* Signer rotation: Participants can be replaced without affecting the validity of previously co-signed transactions
* Resilience against malicious actors: Signing power is decentralised across multiple parties
* Improved security: The threshold structure ensures that a high number of participants must collude for any compromise to occur

This system represents a **significant improvement** over traditional scripted multisigs, offering greater flexibility, security, and resilience.