The future of UTXODAO

6 min readDec 29, 2021

$UTXO, a multichain decentralized reserve currency backed by the Bitcoin Standard

A Short History of (₿,₿)

The idea for UTXODAO came with a simple question: what if we combine the concept of OlympusDAO with the power of Bitcoin? The answer was a no-brainer for us: we are onto something!

But we did not want to just fork OlympusDAO and throw Bitcoin in the mix. Our ambitions go much beyond. Cryptoassets are about innovation. It is standing on the shoulder of giants and making something completely new. And that is one of the core values of UTXODAO. Our goal is to build a solid project backed by a strong community of Bitcoiners such as ourselves which truly believe that Bitcoin represents a real alternative to fiat money. UTXODAO is not about stratospheric but unsustainable APYs, we are here for the long run. Don’t get us wrong though, we are still going to offer very attractive reward rates, OlympusDAO-style. We got you! Our ingenious monetary policy is built to manage a treasury composed entirely by an asset which has been historically more volatile than traditional RFV assets. Our protocol’s long-term commitment is to maintain healthy metrics such as keeping our runway days above 365 days (in other words, we aim to always have enough backing in our treasury to support our reward rate for at least 1 year).

To summarize: the founding principle of UTXODAO is our belief in Bitcoin. Our name is UTXO because that is exactly what our treasury is eager for: unspent transaction outputs which will be kept by our treasury exactly like that: unspent!

What is the deal with (₿,₿)?

(₿,₿) is the idea that if everyone cooperates in UTXODAO, it generates the greatest gain for everyone in the Bitcoin ecosystem (from a game theory standpoint). Users will be able to take three actions on our platform: staking, bonding, and selling.

Staking and bonding are beneficial to the protocol, while selling is detrimental. Therefore, staking and bonding generate the greatest benefits to the Bitcoin ecosystem.

By choosing either way to participate in UTXODAO, the user allows us to retire BTC from circulation or to donate part of the revenues to Bitcoin developers, hence staking or bonding are (₿,₿).

How does UTXO fit among other cryptocurrencies?

UTXODAO seeks to benefit the entire crypto ecosystem: as we lock more and more BTC in our treasury, we will eventually HODL a significant part of the supply with no intentions of ever selling any. Such behavior would greatly release sell pressure from all crypto markets given that there is a strong causal relation between Bitcoin and all other cryptoassets. Therefore, UTXODAO accumulating Bitcoin is (₿,₿) for both UTXO stakers and crypto HODLers in general. But that is not all: as aforementioned, UTXODAO will benefit the Bitcoin ecosystem by sponsoring Bitcoin developers with a portion of our treasury income (with terms & conditions to be defined by the DAO). This is, however, not charity! It is extremely important to UTXODAO’s business model that Bitcoin remains relevant and actual through time, which is only possible with a team of motivated developers working on it.

Which Bitcoin assets will we keep in our treasury?

Initially the treasury will be backed by WBTC, however, in a second phase we will add renBTC bonds and we will constantly review additional ways to add other wrapped BTC assets to our treasury. Moreover, once the DAO deems that we have enough wrapped BTC in the treasury we will convert part of the wrapped BTC to real BTC. We will continuously explore other ways to increase decentralization and mitigate risk with the power of our community.

Furthermore, we have other ideas to generate additional revenues to our treasury: we can put our BTC to work and earn fees by becoming a lender in protocols such as Aave or by becoming a liquidity provider in the Curve WBTC-renBTC pool. Whether we will do it or not, is up for the DAO to vote and decide!

How is UTXO backed by BTC?

1 UTXO will be initially backed by $1 worth in BTC in our treasury. We opted for this model because we believe that Bitcoin will continuously perform well vs the U.S. dollar and other fiat currencies in the long run. This premise means that we will be able to offer attractive APYs for longer periods even if we do not get any additional Bitcoin in our treasury. If we were to back UTXO in satoshi terms, we would always need more BTC inflows to sustain such APYs. Now, picture this scenario: Bitcoin price appreciation vs the U.S. dollar and consistent Bitcoin inflows to our treasury. Yes, that is right. We are talking about rocket fuel.

What is the long-term vision of UTXODAO?

If you have a good eye, you might have noticed that we highlighted the word “initially” above. This was not by chance. As a Bitcoin-based project, we acknowledge that our initial value proposition of backing 1 UTXO with $1 worth in BTC in our treasury is not enough. Such a proposition does not solve a key problem: $1 does not have the same purchasing power through time. $1 in 2021 is less valuable than $1 in 2009, which is less valuable than $1 in 1900 and so on. You can check it for yourself on this simple tool provided by the U.S. Bureau of Labor Statistics! In other words, you need $1.32 now in 2021 to buy the same basket of items that cost you only $1 in January 2009. In case you have been keeping U.S. dollars under your mattress for the past decade or so, you are about 30% poorer.

Why does that happen? Simplistically speaking, inflation. It means that if we were to back UTXO with $1 in our treasury, we would be exposed to the nasty long-term effects of being diluted by the fiat lords. UTXO would lose purchasing power month on month, year on year. To solve that, we propose to have an inflation-adjusted backing for our UTXO token, anchoring the January 2022 U.S. dollar purchasing power to the protocol so that UTXO will have the same intrinsic purchasing power in 2022, in 2050, or in 2100. In other words, if the accumulated U.S. dollar inflation is e.g. 20% between January 2022 and January 2032, in 2032 UTXO will be backed not by $1 worth in BTC, but by $1.20 worth in BTC in our treasury. How do we plan to do it? This is straight-forward: as we strongly believe in Bitcoin fundamentals, our premise is that Bitcoin will consistently perform better than the U.S. dollar. This implies that ceteris paribus the same amount of BTC in our treasury is more than enough to account for the U.S. dollar inflation in any given period of time. Our reward rates will also account for the need to increase the required backing per UTXO in U.S. dollar terms over time.

What is the point of buying UTXO now at a premium?

When you buy and stake UTXO, you capture a percentage of the supply (market cap) which will remain close to a constant. This is because your staked UTXO balance also increases along with the circulating supply. The implication is that if you buy UTXO when the market cap is low, you would be capturing a larger percentage of the market cap. The premium is justified when the net present value of the investment is positive.

Now, with all other things cleared, we can finally address the elephant in the room.

In which blockchain will UTXO be deployed?

UTXODAO is a chain-agnostic project deploying initially on Polygon💜 to make it as fair as possible for anyone that wants to participate, including those who could otherwise be priced out due to prohibitive gas fees. We chose Polygon primarily for 3 reasons: low fees, infrastructure availability (e.g. DEX, multisig safe, fair launch platform), and satisfactory (wrapped) BTC liquidity.

Final Considerations

We have very exciting times ahead of us and we can barely wait to get started! For that we need your help! We have just published our launch roadmap and we will announce our presale details once we reach 2,000 members in our Discord. Hint: you must be a member to be eligible! So what are you waiting for? Join now!