Withdraw BTC

In a single transaction, the user removes some of their Bitcoin collateral from their vault while keeping the same amount of borrowed UNIT. This reduced collateral means the Bitcoin price at which liquidation would be triggered is now higher than before (closer to the current price), given that the user has withdrawn some of their safety margin. The user initiates a transaction to withdraw some of their BTC collateral from their vault UTXO. The MPC Network verifies that the requested withdrawal amount maintains the required minimum collateralization ratio for the existing borrowed UNIT position. The transaction builder constructs a PSBT that separates the withdrawn BTC while maintaining sufficient collateral in the vault. The outputs include the BTC being returned to the user's control and an updated vault UTXO with the reduced collateral amount. In a second transaction, the new vault state is processed, handling the network fees for both transactions to ensure atomicity. This generates an updated vault token reflecting the reduced collateral amount and new collateralization ratio. The vault UTXO maintains both the user update path and guardian/oracle liquidation path, though with a smaller safety margin due to the reduced collateral. An OP_RETURN output records the new vault state with the decreased collateral amount and updated collateral ratio.

Withdraw BTC Transaction Diagram