UTXOracle: The first trustless way to calculate the Bitcoin price

On September 21, 2023, the Bitcoin community witnessed the unveiling of UTXOracle, a groundbreaking solution to the long-standing oracle problem in Bitcoin. This innovative approach leveraged the Bitcoin blockchain’s unspent transaction output (UTXO) set to infer the daily price of bitcoin with remarkable accuracy.
 

By utilizing the UTXO set, developers could now create decentralized applications (DApps) that did not rely on third-party oracles for USD price data. This was particularly beneficial for discreet log contracts (DLCs) and smart contracts, which required reliable price feeds to function effectively.
 

The implications of UTXOracle were vast, with potential use cases ranging from on-chain lending markets to Bitcoin-backed USD stablecoins on the Lightning Network. It promised to empower Bitcoiners to utilize the cryptocurrency’s superior monetary properties while also catering to those in the ecosystem who needed to remain partially tied to USD but wanted to use Bitcoin as their settlement network.
 

The UTXOracle model performed exceptionally well during its testing phase from July 2020 to January 2023, with daily median and average variances between the actual volume-weighted average price (VWAP) and the UTXOracle price within the normal range of fees charged for bitcoin purchases at retail exchanges.

Developed by Steve Jeffress, UTXOracle eliminates the need for third-party exchange data, providing Bitcoiners with a decentralized alternative for tracking price averages.