Hey stackers,
I’ve been working on a small design idea called cBTC and wanted to put it here to get feedback from the Bitcoin crowd that actually thinks deeply about incentives, collateral, and failure modes.
TL;DR
A Bitcoin-backed unit of account minted at 30% LTV, fully backed by on-chain BTC, redeemable for BTC at spot, and designed to offer stable value without USD pegs, centralized issuers, or algo-stable mechanics.
Basic idea
- LPs deposit BTC
- Protocol mints up to 0.3 cBTC per 1 BTC
- cBTC circulates as the lower-volatility asset
- Users redeem cBTC for BTC using the spot BTC/USD rate (kills arbitrage)
- Vault remains 100% BTC-backed and auditable
- LP yield comes from swap/liquidity flow — no lending, no leverage, no external counterparty risk
Why explore this?
There’s demand for stable value inside the Bitcoin ecosystem without relying on USDT/USDC, custodians, or off-chain backing.
cBTC tries to answer: Can we get stable value + Bitcoin trust assumptions at the same time?
What I’d love feedback on
Honest critique is welcome. Especially:
- whether 30% LTV is actually safe for BTC volatility
- possible redemption-based arbitrage vectors
- unexpected game-theoretic risks
- how this fits (or doesn’t) with Lightning/Taproot asset models
Whitepaper
Full discussion draft:
https://github.com/jamestector-coder/cBTC/blob/main/v.3.%20cBTC%20Whitepaper%2002%20Nov.%202025%20(FAQ%20included).pdf
This isn’t a token sale or anything financial — just a concept draft I’d like to stress-test.
Happy to hear your thoughts, especially the critical ones.
Thanks stackers ⚡
Ducat project aims to do something similar.
Thanks for the reference about the Ducat project
SCAMMERS WILL ALWAYS COME UP WITH NEW SCAMS
You say it's not another stablecoin but it is in fact a stablecoin, right? Else, what is it stable relative to if not a fiat currency like USD?
Great question — and you’re right to challenge the wording.
cBTC is not a stablecoin in the traditional sense because it is not pegged to USD (or to any fiat currency). It doesn’t target a $1 price, it doesn’t use arbitrage bots, and there’s no issuer promising convertibility at a fixed rate.
So what is it “stable” relative to?
cBTC aims for relative stability inside the Bitcoin monetary system, not parity with fiat.
More precisely:
1. cBTC is “stable” relative to Bitcoin’s upside volatility, not USD.
It’s minted at 30% LTV against BTC, so instead of tracking the dollar, it tracks a fraction of BTC’s value.
If BTC goes up or down 10%, cBTC moves far less because it represents only 0.3 BTC of exposure.
It's basically a dampened-volatility BTC unit, not a fiat-pegged instrument.
2. It’s not stable against USD inflation — it’s stable away from fiat.
Traditional stablecoins outsource monetary stability to central banks (USD).
cBTC tries the opposite:
It creates a Bitcoin-native unit of account that does not depend on fiat or external collateral.
You could say it’s “stable against fiat debasement” only because the collateral is Bitcoin — but that’s not the core design goal.
3. The goal is not price stability — it’s functional stability.
The intention is to give Bitcoin users:
In short:
USD-stablecoins peg to the dollar.
cBTC aims for a Bitcoin-native low-volatility unit.
So yes — you can call it a stablecoin if your definition is “asset designed to be less volatile,” but it’s not a USD-stablecoin, and it doesn’t behave like one. It’s simply a different species.