Home › Learn › What is UCD, the Bitcoin-backed stablecoin? # What is UCD, the Bitcoin-backed stablecoin? By Jamie Cooke · Published 25 October 2026 · Updated 25 October 2026 ## The short answer **UCD** is a Bitcoin-backed stablecoin, minted on Diamond Hands by GVNR when you borrow against BTC locked in an isolated vault on Bitcoin L1. You can swap UCD into USDC or USDT, and you repay in UCD to withdraw your BTC. A 3% mint fee on the amount borrowed is added to your debt at mint, for a 12-month term. ## Key facts - UCD is a Bitcoin-backed stablecoin with contract address 0xaAaB6B05E5EecB015898483d4e6703d7F218850b. - Minted when you borrow against BTC that stays native on Bitcoin L1 in an isolated vault for that loan only. - The [3% mint fee](https://diamondhands.credit/learn/is-the-3-percent-fee-an-apy/) on the amount borrowed is added at mint: borrow 100 UCD, receive 100 UCD, and repay 103 UCD over a 12-month term with no monthly payments. - Maximum LTV at opening is 66% (a 150% minimum collateral ratio). Once repaid, your BTC is withdrawable after 6 Bitcoin block confirmations. ## What is UCD? UCD is the stablecoin you receive when you borrow on Diamond Hands. If you saw the ticker and assumed it was a typo for USDC, it isn't. UCD is its own token at contract address 0xaAaB6B05E5EecB015898483d4e6703d7F218850b. Check that address before accepting any token calling itself UCD. ## How is UCD created? You create UCD yourself by borrowing. In the [Diamond Hands app](https://app.diamondhands.credit/) it takes five steps: 1. **Deposit BTC.** BTC stays native on Bitcoin L1 in an isolated vault for that loan only, with no wrapping or bridge. 2. **Mint UCD.** Borrow up to 66% LTV at opening. The 3% mint fee is added at mint: borrow 100 UCD, receive 100 UCD, and owe 103 UCD over 12 months with no monthly payments. 3. **Swap.** Hold UCD or swap it into USDC or USDT for liquidity. 4. **Repay UCD.** Repay in part or full anytime before the 12-month term ends, with no early-repayment penalty. 5. **Withdraw BTC.** Once repaid, your BTC is withdrawable after 6 Bitcoin block confirmations. At term end you can extend 12 months for 3% of the outstanding debt per renewal. See [How do I borrow against Bitcoin without selling it?](https://diamondhands.credit/learn/borrow-against-bitcoin-without-selling/) and [how the 3% mint fee works](https://diamondhands.credit/learn/is-the-3-percent-fee-an-apy/). ## How is UCD different from USDC or USDT? UCD is minted by borrowers against their own Bitcoin collateral. Each loan's BTC sits in its own vault and is [never pooled or rehypothecated](https://diamondhands.credit/learn/is-my-btc-rehypothecated/). Because BTC stays native on Bitcoin L1, there is no wrapped token in the middle; see [borrowing against native BTC rather than wBTC](https://diamondhands.credit/learn/native-btc-vs-wbtc-borrowing/). By contrast, Circle states USDC is "backed 100% by highly liquid cash and cash-equivalent assets" ([Circle](https://www.circle.com/usdc)), and Tether states its tokens are "backed 100% by Tether's Reserves", including "traditional currency, cash equivalents, and other assets" ([Tether](https://tether.to/en/)). While a loan is open, you can add BTC anytime, repay any UCD amount, and withdraw part of your BTC if your collateral ratio stays at or above 110%. GVNR cannot move your BTC on its own; only in a liquidation is vault ownership transferred to clear debt. ## What are the risks? Your loan is tracked by its collateral ratio: BTC value in your vault against UCD debt. Loans open at a 150% minimum collateral ratio; borrowing the 66% maximum LTV starts at that 150% minimum. LTV is set at opening; the collateral ratio is managed afterwards. The app shows loan health, warning below 150% and sending an email alert if enabled; no action is taken until 110%. Below 110%, liquidation is full, triggered only by specified liquidators (currently GVNR DAO), who burn UCD equal to your debt and take the whole vault with no BTC returned. Unrenewed after 12 months, the 110% threshold rises daily. ## Frequently asked questions ### Is UCD the same as USDC? No. UCD is the Bitcoin-backed stablecoin minted on GVNR Diamond Hands against native BTC locked on Bitcoin L1, at contract address 0xaAaB6B05E5EecB015898483d4e6703d7F218850b. USDC is issued by Circle against cash and cash-equivalent reserves. ### How is UCD backed? Every UCD loan is backed by native BTC in an isolated vault on Bitcoin L1 for that loan only, never pooled or rehypothecated. Loans open at a 150% minimum collateral ratio (66% maximum LTV) and face full liquidation below 110%. ### What does it cost to mint UCD? A 3% mint fee on the amount borrowed is added at mint: borrow 100 UCD, receive 100 UCD, and repay 103 UCD within 12 months, with no monthly payments or early-repayment penalties, or renew for 3% of the outstanding debt. ### How do I repay UCD and withdraw my BTC? You can repay UCD in part or full anytime. While a loan is open, you can withdraw part of your BTC if your collateral ratio stays at or above 110%; once repaid in full, your BTC is withdrawable after 6 Bitcoin block confirmations. ## Sources All checked 25 Oct 2026. 1. Circle, "USDC — Digital dollars backed 100% by liquid cash and cash-equivalent assets": [circle.com](https://www.circle.com/usdc). 2. Tether, "Tether tokens — Why use Tether / How it works": [tether.to](https://tether.to/en/). ## Related - [Open the Diamond Hands app](https://app.diamondhands.credit/) - [How do I borrow against Bitcoin without selling it?](https://diamondhands.credit/learn/borrow-against-bitcoin-without-selling/) - [What is the difference between BTC and wBTC when you borrow against it?](https://diamondhands.credit/learn/native-btc-vs-wbtc-borrowing/) - [Is the 3% fee on Diamond Hands an APY?](https://diamondhands.credit/learn/is-the-3-percent-fee-an-apy/) - [Is my BTC rehypothecated on Diamond Hands?](https://diamondhands.credit/learn/is-my-btc-rehypothecated/) ## About the author ### Jamie Cooke Partnerships and Outreach, GVNR. [LinkedIn](https://www.linkedin.com/in/jamie-cooke-4441b143) Jamie Cooke leads Partnerships and Outreach at GVNR, the team behind Diamond Hands. He has been active in DeFi since 2020. He spent his first couple of years learning how on-chain lending, stablecoins and Bitcoin infrastructure actually work, before joining GVNR to build its partnerships and community. He writes about Bitcoin-backed borrowing in plain terms, so people can understand how it works and how to keep control of their BTC. Diamond Hands is a decentralised protocol. Borrowing involves risk, including liquidation of collateral. Nothing on this site constitutes financial advice.