Ducat Protocol Integrates UNIT Stablecoin with Cashu for Private Bitcoin Transactions
Ducat, a protocol designed for credit and stablecoin operations on Bitcoin’s base layer, is set to introduce its UNIT stablecoin to the Cashu ecash protocol. The new iteration will be known as Turbo UNIT.
The announcement, made on October 24, 2026, centers on a straightforward proposition: a dollar-pegged token backed by Bitcoin, capable of facilitating private and rapid off-chain transactions without leaving a trace on the public Bitcoin ledger.
The process begins with a deposit. Users will send their UNIT stablecoins to the Ducat Cashu mint, receiving Turbo UNIT, an ecash version of the same stablecoin, in return.
From this point, payments become remarkably streamlined. Turbo UNIT can be transferred peer-to-peer via messages or QR codes, eliminating the need for an on-chain transaction for each individual transfer.
Privacy is achieved through Cashu’s implementation of blind signatures. This mechanism functions akin to a notary stamping a sealed document; the stamp is validated, but the notary remains unaware of the document’s contents. In the context of payments, the mint can confirm the legitimacy of a token without being able to link it back to the original recipient. Consequently, spending a token reveals minimal information about its transactional history.
Crucially, the underlying financial infrastructure remains robust. The collateral backing UNIT and the issuance of UNIT itself are anchored to the Bitcoin blockchain, while Cashu manages the swift and private payment layer on top.
UNIT is characterized as an overcollateralized stablecoin on Bitcoin, maintaining a soft peg to the U.S. dollar. It is issued using the Runes standard, a method for creating tokens directly on the Bitcoin network. A soft peg signifies that the price hovers near a target value rather than being rigidly fixed. UNIT has historically traded within a narrow range, typically between $1.01 and $1.04, indicating a tendency to trade slightly above the dollar mark.
Overcollateralization and Security
The protocol’s conservative approach is evident in its overcollateralization requirements. Borrowers are mandated to maintain a minimum collateralization ratio of 160%, meaning they must lock up $160 worth of Bitcoin for every $100 of UNIT they mint.
A liquidation threshold is triggered when a position’s collateral value drops to 135% of the loan amount. This 25-percentage-point buffer serves as a safeguard against forced sales in volatile market conditions.
The collateral is secured in non-custodial vaults built on Taproot, a Bitcoin upgrade that enhances scripting capabilities and operational efficiency. This ensures that users retain control over their Bitcoin, rather than entrusting it to a third party.
For holders, UNIT functions as a borrowing instrument. Instead of liquidating their Bitcoin to access dollar liquidity, they can lock it up and mint a stablecoin against it.
Ducat commenced operations with a closed mainnet alpha earlier in 2026 and has since processed over 4 million transactions. The protocol has secured more than $700 million in Bitcoin collateral, with over $300 million in UNIT minted. These figures align with the overcollateralization model, as the value of locked Bitcoin significantly exceeds the value of the stablecoin issued against it.
Design Philosophy and Integration
The project adheres to a distinct design philosophy, operating directly on Bitcoin’s Layer 1 without reliance on external platforms or Layer 2 networks for its core functionalities.
Cashu, developed independently since 2022, was engineered for private ecash transactions on Bitcoin, making it an ideal complement for a stablecoin intended for spending rather than solely for holding.
For UNIT holders, this integration offers a dual utility for the token. Beyond its established role as a borrowing instrument for Bitcoin holders, UNIT now gains a private payment capability that bypasses conventional on-chain transaction fees.
Trust and Monitoring Considerations
The trust model warrants careful observation. Depositing UNIT into the Ducat Cashu mint requires users to place confidence in that mint to facilitate redemptions back into UNIT. This differs from the non-custodial Taproot vaults that safeguard the underlying collateral. In essence, the collateral layer and the payments layer operate under distinct assumptions. Users prioritizing privacy should be aware of which layer they are interacting with at any given time.
The stability of the peg is another key factor to monitor. UNIT’s typical trading range between $1.01 and $1.04 indicates its proximity to the target dollar value. However, a soft peg, by its nature, represents a commitment to remain close rather than an absolute guarantee of a one-dollar value.
Collateral management also remains critical. With a minimum collateralization of 160% and a liquidation threshold at 135%, significant Bitcoin price fluctuations could test the system’s resilience in managing stressed positions, particularly as the volume of vaulted Bitcoin continues to grow beyond its current level of over $700 million.
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