Ducat | Earn Passive Income with Your Idle Bitcoin\! An Innovative Protocol to Borrow the USD-pegged Stablecoin "UNIT" Against Your Bitcoin

Is your BTC just sitting idle in your wallet?

What if there was a way to generate new returns from your Bitcoin without selling it?

The "Ducat Protocol," which we introduce today, is a project that truly makes that dream a reality, heralding the "dawn of a new chapter" in Bitcoin's history.

By reading this article, you will understand everything from Ducat's innovative mechanics to its future potential, and most importantly, the 【Specific Actions to Get the Airdrop】. Now, let's embark on a journey to unlock the true value of your BTC.

What is Ducati in 3 minutes?<br> Ducat is a new form of financial system that operates directly on the Bitcoin blockchain. Users can create a collateralized position called a "Vault" while maintaining self-custody of their own BTC, without entrusting it to anyone. Using this as collateral, they can issue (borrow) "UNIT," a stablecoin pegged to the value of the US dollar.<br> This is the true "BTC-native DeFi," made possible by Bitcoin's latest technologies like Taproot and Runes. It aims to realize a world where everyone can safely utilize the value of over $1.3 trillion in idle BTC assets, breathing new life into them without the need for centralized custodians or high-risk bridges.

The Dawn of BTCFi and the Awakening of the "Sleeping Giant"

Bitcoin (BTC), the king of crypto assets. Its value, security, and decentralization are unparalleled. However, the vast majority of this enormous asset has been in a state of just being "held." According to one analysis, a staggering 89% of the total BTC supply, worth over $1.3 trillion, is said to be lying dormant in wallets without being utilized.

This is because Bitcoin was originally designed without complex financial transactions (DeFi) in mind. To use DeFi, it was necessary to "bridge" BTC to another blockchain, like with WBTC. However, this always came with hacking risks and the centralized risk of entrusting assets to a specific custodian, which went against the very soul of Bitcoin: "protecting your own assets."

But things have changed. With the evolution of Bitcoin itself, especially the "Taproot" upgrade, the groundwork has been laid for running more advanced programs. Blooming on this technological advance is a new economic sphere called "BTCFi (Bitcoin Finance)," which realizes DeFi directly on Bitcoin.

At the forefront of this revolution is the Ducat Protocol, which we will explain today. Ducat provides a mechanism for "stablecoin issuance" and "borrowing" on Bitcoin L1 (Layer 1), allowing you to safely unlock value without giving up custody of your BTC. This is not just the birth of a new project, but a historic turning point that pushes Bitcoin's potential to the next level.

Ducat operates mainly through three elements. They interact with each other to generate new value from your BTC.

① Stablecoin "UNIT": A Stable Asset Born from BTC UNIT is a US dollar-pegged stablecoin created by Ducat. Its greatest feature is that it is issued 100% on Bitcoin L1, solely collateralized by BTC.<br> Rock-Solid Stability with "Over-collateralization": The value of UNIT is always backed by BTC worth more than the amount issued. Specifically, to borrow UNIT, you must deposit BTC equivalent to at least 160% of the amount you wish to borrow as collateral.<br> 【Example】 By depositing $16,000 worth of BTC into a "Vault," you can borrow up to 10,000 UNIT (about $10,000). This 60% difference acts as a powerful buffer to protect the entire protocol from BTC price fluctuations.<br> Issued with the Latest "Runes" Technology: UNIT is issued as a "Runes" token, Bitcoin's new fungible token standard. This is technologically efficient and provides a BTC-native experience, making it a point of interest even for advanced DeFi users.<br> ② Governance Token "DUCAT": The Guiding Compass for the Future DUCAT is a token that grants voting rights to decide the protocol's operational policies. DUCAT holders can participate in the DAO (Decentralized Autonomous Organization) to decide on important system rules like fee rates and collateralization ratios. In the future, a mechanism to distribute a portion of the protocol's fees to DUCAT holders is also anticipated, holding the potential for earning just by holding the token.

③ "Vault": A Private Safe for Your BTC A "Vault" is your personal digital safe for borrowing UNIT against your BTC. If you're familiar with DeFi, you can think of it as the same as a "CDP (Collateralized Debt Position)."

【How to Use a Vault: 4 Easy Steps】<br>

1. Open: Open your personal "Vault" on the Ducat site.<br>

2. Deposit: Send the BTC you want to use as collateral from your own wallet to the Vault.<br>

3. Borrow: Issue (borrow) your desired amount of UNIT within the value of your deposited BTC (up to 62.5%).<br>

4. Repay & Withdraw: By repaying the borrowed UNIT and a designated fee, you can withdraw your entire BTC collateral at any time.<br>

   The most important point is that throughout this entire process, you retain ownership of your BTC. There is absolutely no need to trust a centralized custodian, and the Bitcoin spirit of "self-custody" is fully preserved.

"But isn't Bitcoin's smart contract functionality weak?" — That's right. And that's precisely why Ducat's technology is so groundbreaking. The secret lies in the combination of two technologies: <u>"Taproot"</u> and the <u>"MPC Network."</u>

1. Taproot/Tapscript: Bitcoin's "Taproot" upgrade made it possible to embed more complex conditions (rules) into transactions, such as "if the collateral value falls below a certain level, permit liquidation."
2. MPC Network (The Fair Watchmen): However, an entity is needed to watch over whether those rules are always executed correctly. This is where the MPC network, composed of decentralized "Guardians," comes in. They act as "watchmen" who check if user transactions violate Ducat's rules. If the rules are followed, they collectively co-sign the transaction to approve it. The key point is that the Guardians cannot access your private keys and can never move your assets arbitrarily. They are, in essence, a fair panel of judges for the rules.

This hybrid mechanism achieves the maximum possible decentralization and security within the current constraints of Bitcoin.

The lifeblood of a DeFi protocol is its stability during market crashes. Ducat ensures this with a clever liquidation mechanism.

• Decentralized Liquidation: If the price of BTC falls and your Vault's collateralization ratio drops below the critical level of 135%, the Vault enters "liquidation mode." Then, anyone in the world can take on your debt (UNIT) in exchange for buying your BTC collateral at a slight discount to the market price. This economic incentive automatically prevents bad debt from accumulating and maintains the overall health of the protocol.
• The Path to True Trustlessness: While the current MPC network is innovative, Ducat is looking even further ahead. If new features are added to Bitcoin in the future, it holds the potential to evolve into a "truly trustless" system where this "watchmen" network is no longer needed, and all rules are executed autonomously and directly on Bitcoin L1. This is proof that Ducat is designed with a very long-term perspective, anticipating future technological advancements.

When you hear "borrowing a stablecoin against BTC," you might think of the DeFi giant "MakerDAO." However, there are decisive differences between the two.

The biggest difference is the "elimination of bridge risk." To use BTC in MakerDAO, you first need to "wrap" it by depositing it with a specific custodian, as with WBTC. This is a vulnerable single point of failure that has been targeted in hacks many times in the past.

Ducat completely eliminates this risk and handles BTC as it is. This is precisely why Ducat is called "true BTCFi."

Now for the main event! Ducat has raised $4 million (approx. 640 million JPY) from top VCs like CMS Holdings and Bitcoin Frontier Fund. It is currently running aggressive point campaigns, and a future airdrop of the "DUCAT" governance token is seen as almost certain.

This is a chance to get a big return by participating early and contributing to the protocol. Follow the steps below and take action right now!

Step 1: Get Prepared

1. Get a Wallet: Install UniSat Wallet or Xverse Wallet in your PC browser.
2. Switch to Testnet: In your wallet's settings, change the network to "Testnet" (or Mutinynet).
3. Get Test BTC: Receive free test BTC (tBTC) from public faucet sites.
   • Recommended Faucet 1
   • Recommended Faucet 2

Step 2: Try Out the Ducat Testnet

1. Access the Ducat App: Go to the official Ducat site and connect your wallet.

2. Master the Basic Operations:

   • Open a Vault: Create a safe from the "Create Vault" button.
   • Deposit tBTC: Deposit test BTC as collateral.
   • Borrow UNIT: Mint (issue) UNIT against your collateral.
   • Repay UNIT: Repay some or all of the borrowed UNIT.
   • Withdraw tBTC: Withdraw your collateralized tBTC.

   Tip: By performing these operations regularly (e.g., once a week), you will be recognized as an active user, increasing your chances of being eligible for the airdrop.

Step 3: Rack Up Points!

The keys to the airdrop are the official points program "Quanta" and the campaigns on "Galxe."

1. Quanta Points: Check and complete the "Missions" and "Side Missions" in the Ducat app to earn Quanta points.
2. Galxe Campaign: Go to the Ducat Galxe page and complete simple tasks.
   • Follow & Repost on X (Twitter)
   • Join Discord
   • Answer simple quizzes
   • Daily/Weekly/Monthly check-ins

Diligently completing these tasks will lead to big returns in the future.

Ducat is supported by an experienced team and strong funding, and it has a clear vision. However, this grand challenge also has hurdles to overcome.

• Team and Funding: The team, led by CEO David, is actively recruiting for key positions, showing a strong desire for project growth. The $4 million in funding from top VCs is a testament to its credibility.
• Roadmap: In the short term, the goals are a stable mainnet launch and user acquisition. In the long term, it aims to incorporate Bitcoin's own evolution and transition to a more completely decentralized system.

3 Hurdles to Success

1. Dependence on the MPC Network: How to technologically eliminate the need for trust in the current "watchmen" network in the future.
2. The Oracle Problem: How to ensure the reliability and decentralization of the "oracle" that feeds BTC prices to the protocol. This is a challenge for all DeFi protocols.
3. Bootstrapping Liquidity: Whether the issued UNIT can become a "valuable stablecoin" that is widely used on other exchanges.

These challenges are not just for Ducat but for the entire BTCFi ecosystem. Conversely, when Ducat overcomes these challenges, it has the potential to become the de facto standard of BTCFi.

The Ducat Protocol is not just another new DeFi project. It is a grand experiment that will unlock the dormant value of Bitcoin and write a new page in its history.

Safely unlock the value of your BTC without taking bridge risks and explore new revenue opportunities. And, as an early participant in the process, you have the chance to get the big prize of an airdrop.

The dawn of BTCFi is just around the corner. Let's take action now so you don't miss out on this historic moment.