Open Vault
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The user deposits Bitcoin and in return receives UNIT tokens, with the Bitcoin being locked up as collateral in what the protocol denotes as a newly created vault. The process happens in two joint, concurrent transactions - first the user gets their UNIT tokens, and second, their Bitcoin is moved into a vault which creates an on-chain record of the vault's creation.
The user requests an account UTXO from the MPC Network which requests an account assignment for a requested number of UNIT runes, verifies the necessary amount of BTC is being deposited, verifies the price of BTC in USD terms at time of request, and assesses the required Bitcoin network fee. Once these variables are assessed, the transaction builder constructs a PSBT on the user’s behalf which passes through the amount of BTC. The output of the transaction is the user receiving their UNIT, the MPC network getting the remaining runes in their account UTXO, and the BTC that the user ‘deposited’ as collateral would be stored in one of the outputs. In a second transaction, the BTC from the previous txn is deposited into the vault UTXO. This pays the fees for txn 1 and txn 2 – ensuring atomicity of the two txns - and then generates a vault token, to memorialise the instantiation of the vault for record-keeping purposes. The vault’s UTXO (where the vault’s BTC collateral is stored) has 2 spending paths which determine how the BTC can be spent: the path where the user can update the vault, and the path where the guardian and oracle jointly liquidate the vault in the event that the vault’s collateralization trips the liquidation threshold. An OP_RETURN vault keeps a record of the evolution of the user’s vault borrow and collateralization history.
