On September 18, Ducat Protocol will introduce something Bitcoin has never had before: a permissionless liquidation system running directly on Bitcoin Layer 1. For years, liquidation mechanisms have been reserved for Ethereum and other programmable chains. Bitcoin was left without a native way to handle risk onchain. Ducat has now changed that, and the proof is already live on testnet.
At its core, the system is simple. Users deposit Bitcoin into vaults and mint UNIT, Ducat’s stablecoin at a 160% collateral ratio. If the value of the collateral falls below 135% of the borrowed amount, the vault becomes eligible for liquidation. Anyone can step in, repay the debt, and purchase the BTC at a discount. It is an open process, accessible to anyone who wants to participate, and enforced entirely by code. There are no insiders, no gatekeepers, and no custodians holding funds.
Co-Founder David Evans described it: “It is not just a technical breakthrough, it is a paradigm shift for global financial markets. Liquidations on Bitcoin mean equal access to credit, fair risk management, and open participation in financial markets for anyone, anywhere.”
What Ducat has built cuts to the heart of Bitcoin’s ethos. The protocol removes the need for wrapped tokens or intermediaries. It is trustless and non-custodial, using Taproot and multi-party computation to create mechanics that look familiar to traditional finance but operate entirely onchain. It delivers the kind of financial primitive that makes credit markets possible, only this time on Bitcoin’s base layer.
The testnet numbers are already significant. More than 150 million dollars in testnet BTC has been vaulted. Over 35 million in testnet UNIT has been borrowed. More than 2.5 million transactions have been processed by more than 60,000 active users. These figures suggest real demand for a Bitcoin-native stablecoin system that gives participants both security and opportunity.
Ducat has raised 4 million dollars to get here, with backing from UTXO Management, Hivemind Capital, CMS Holdings, and the Bitcoin Frontier Fund. The project is already integrated with a growing list of partners, including Botanix, Xverse, Bitflow, Liquidium, Portal, VoltFi, and others working at the forefront of Bitcoin finance.
Mainnet is expected in Q4 2025. Alongside the rollout, Ducat will launch a governance token that benefits from protocol revenue and allows holders to vote on rule changes. Independent audits are scheduled before the release.
The larger goal is to unlock a portion of the more than two trillion dollars in Bitcoin currently sitting idle. Today, less than two percent of Bitcoin is engaged in DeFi. Ducat’s founders believe that by creating a transparent and permissionless liquidation engine, Bitcoin can finally become productive collateral. The system is live on testnet, and when released to mainnet later this year, it will reshape how risk is managed on the world’s most secure financial network.
For more information, visit https://ducatprotocol.com
The white paper is available at https://docs.ducatprotocol.com
Updates can be followed on X at https://x.com/Ducatstable
