what's Uncap?

Uncap is a decentralized protocol built on the Starknet layer-2 blockchain, enabling users to mint a Bitcoin-backed stablecoin called USDU through a non-custodial borrowing mechanism. Drawing inspiration from the Liquity model, it establishes a marketplace for collateralized debt positions where users deposit wrapped Bitcoin (WBTC) as collateral to borrow USDU at interest rates they set themselves. This design allows Bitcoin holders to unlock liquidity and earn yields without selling their assets, promoting Bitcoin's utility in DeFi while maintaining decentralization and security through Starknet's zero-knowledge technology. The protocol operates via key components like the Stability Pool, where USDU depositors provide liquidity to absorb liquidations and earn rewards from interest revenue and discounted collateral. Borrowing rates are adaptive, determined by market dynamics rather than centralized committees, balancing cost and risk—lower rates offer cheaper loans but increase liquidation vulnerability, while higher rates enhance position safety. Integration with platforms like Ekubo for liquidity pools further supports USDU's ecosystem, enabling trading and additional yield opportunities in a Bitcoin-centric DeFi environment.

Uncap launched a WBTC yield vault on Ethereum, enabling access to Starknet strategies.

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