DA-05 · LESSON 08

Why the Ducat oracle is Bitcoin-native

KEY DEFINITIONS

Terms used in this lesson

Oracle: A system that reports outside information, such as a market price, for use by a protocol.
Hashlock: A spending condition that requires revealing data matching a committed hash.
UTXO: Unspent transaction output: one discrete chunk of bitcoin that can be used as a transaction input.
Vault: A set of Bitcoin outputs and spending rules that holds collateral and represents the current loan state.
Witness: Signatures, scripts, or other data supplied to satisfy a Bitcoin output’s spending condition.
Preimage: The original secret data whose hash equals a previously committed value.
Guardian: A Ducat policy-checking signer that can authorize or reject defined protocol transactions.
Taproot: A Bitcoin output and spending design that can combine a public-key path with privately committed alternative scripts.
CRE: Chainlink Runtime Environment: the orchestration layer in which a workflow can request data, run checks, and coordinate outputs. It is not itself the price source.
BTC: The common market ticker for bitcoin.
USD: United States dollar, the reference currency in a BTC/USD price.
DON: Decentralized Oracle Network: a group of independent Chainlink oracle nodes that retrieve, check, combine, and sign outside data.
Collateral: An asset pledged against a debt; it can be used to cover the debt if agreed conditions are breached.
Tapscript: The version of Bitcoin Script used by a Taproot script-path spend.
Hash160: SHA-256 followed by RIPEMD-160, producing the 20-byte hash used by several Bitcoin spending conditions.
Control block: Proof data showing that a revealed script was committed inside a Taproot output.
Schnorr signature: Bitcoin’s Taproot signature scheme, whose algebra supports compact verification and advanced multi-party signing.
Nostr: A signed-event messaging protocol; Ducat can use relays to distribute oracle material without making those relays Bitcoin validators.
BIP340: The Bitcoin Improvement Proposal specifying Schnorr signatures for the secp256k1 curve.

Chainlink supplies authenticated data, but Bitcoin-native enforcement comes from the committed hashlock and signature path inside the Bitcoin UTXO.

65 min Difficulty 5/5 Not started

VISUAL MODEL

See the whole mechanism before going step by step

Use the diagrams to orient yourself. Then the guided explanation below teaches every part in depth.

4 explanatory views

CONCEPT-SPECIFIC MAP · ducat vaultA Ducat action moves one Bitcoin-anchored vault state to a successorSelect any state to inspect its exact role.

RELATIONSHIP MAPInputs, rule, and outputs

01
PREDECESSORCurrent vault outpoint
The current Bitcoin output anchors collateral and identifies the state being spent.
02
REQUESTWhy the Ducat oracle is Bitcoin-native
The Why the Ducat oracle is Bitcoin-native workflow proposes one exact action and successor state.
03
POLICYProfile, oracle, signatures
Applicable policy, price evidence, authorization, and transaction shape are checked.
04
BITCOIN SPENDScript-valid transaction
Bitcoin miners and nodes can include only a transaction that satisfies Bitcoin rules.
05
SUCCESSORNew outpoint and state
Ducat validators reconstruct debt, collateral, token, and account changes from the confirmed transaction.

Rule shown: Bitcoin checks the spend; Ducat components independently reconstruct and validate the additional protocol state.

STAGE 1 OF 5PREDECESSOR: Current vault outpoint

The current Bitcoin output anchors collateral and identifies the state being spent.

Governing relationship: Bitcoin checks the spend; Ducat components independently reconstruct and validate the additional protocol state. Complete path: 1. PREDECESSOR, Current vault outpoint. The current Bitcoin output anchors collateral and identifies the state being spent. 2. REQUEST, Why the Ducat oracle is Bitcoin-native. The Why the Ducat oracle is Bitcoin-native workflow proposes one exact action and successor state. 3. POLICY, Profile, oracle, signatures. Applicable policy, price evidence, authorization, and transaction shape are checked. 4. BITCOIN SPEND, Script-valid transaction. Bitcoin miners and nodes can include only a transaction that satisfies Bitcoin rules. 5. SUCCESSOR, New outpoint and state. Ducat validators reconstruct debt, collateral, token, and account changes from the confirmed transaction.

1. State transitionWhat exists, what changes, and what results

BEFORE

A vault commits Hash160(secret-140) in its liquidation leaf for a particular collateral threshold.

MECHANISM

The Chainlink CRE workflow fetches BTC/USD reports and can verify their DON signatures before accepting the price used to advance the oracle cycle.

AFTER

Bitcoin enforces the commitment at spend time. The oracle and Guardian remain external liveness and honesty assumptions; ‘Bitcoin-native’ does not mean trustless or oracle-fr…

Text equivalent: Starting from A vault commits Hash160(secret-140) in its liquidation leaf for a particular collateral threshold. The mechanism begins when The Chainlink CRE workflow fetches BTC/USD reports and can verify their DON signatures before accepting the price used to advance the oracle cycle. The resulting lesson is Bitcoin enforces the commitment at spend time. The oracle and Guardian remain external liveness and honesty assumptions; ‘Bitcoin-native’ does not mean trustless or oracle-free.

2. Mechanism pathSelect a stage to inspect its job

STAGE 1 OF 5

Obtain and authenticate price data

The Chainlink CRE workflow fetches BTC/USD reports and can verify their DON signatures before accepting the price used to advance the oracle cycle.

Complete path: 1. Obtain and authenticate price data: The Chainlink CRE workflow fetches BTC/USD reports and can verify their DON signatures before accepting the price used to advance the oracle cycle. 2. Commit future threshold outcomes: For a ladder of collateral thresholds, the oracle publishes commitments. Each commitment fixes a secret outcome without revealing the preimage in advance. 3. Put the commitment in the vault: The liquidation Tapscript leaf contains the expected Hash160 value. The Taproot output therefore commits to the exact hashlock Bitcoin will later enforce. 4. Reveal and spend after a breach: When a threshold is breached, the matching preimage is released. A liquidation witness supplies that preimage, the revealed script and control block, and the required Guardian Schnorr signature. 5. Let Bitcoin verify the witness: Every validating node checks the preimage hashes to the committed value and the signature is valid. Nostr relays distribute data, but they do not decide whether the Bitcoin spend is valid.

3. Rule and failure boundaryWhat accepts the result and where it can stop

ACCEPTED PATH

Bitcoin reconstructs the committed Taproot output, verifies Hash160 of the raw preimage, and checks the Guardian BIP340 signature over the spending transaction.

CHANGED CONDITION

A wrong preimage, signature, script, or control block rejects the spend. Oracle or Guardian unavailability happens outside Bitcoin and can prevent a valid witness from being assembled.

Important distinction: Bitcoin nodes read Chainlink or Nostr to decide whether a Ducat vault may be liquidated. They do not. Nodes only evaluate the transaction witness and committed Script. Off-chain systems deliver the data that makes that witness possible.

Text equivalent: The accepted path is enforced by Bitcoin reconstructs the committed Taproot output, verifies Hash160 of the raw preimage, and checks the Guardian BIP340 signature over the spending transaction. If the required condition changes, A wrong preimage, signature, script, or control block rejects the spend. Oracle or Guardian unavailability happens outside Bitcoin and can prevent a valid witness from being assembled.

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Learn the idea

The precise claim is not that Chainlink itself becomes part of Bitcoin. Chainlink supplies authenticated price data; Ducat makes an oracle outcome usable by Bitcoin by committing a hashlock into the vault’s Taproot script before liquidation occurs.

GUIDED EXPLANATION1/5 ideas inspected

Obtain and authenticate price data

The Chainlink CRE workflow fetches BTC/USD reports and can verify their DON signatures before accepting the price used to advance the oracle cycle.

The worked example follows the explanation

Inspect every idea above to open it.

Important distinction“Bitcoin nodes read Chainlink or Nostr to decide whether a Ducat vault may be liquidated.”

They do not. Nodes only evaluate the transaction witness and committed Script. Off-chain systems deliver the data that makes that witness possible.

FINISH LEARNING FIRST

The questions unlock after every required learning activity

Inspect every guided idea, open the worked example, rebuild its mechanism, and complete the deterministic lesson tool. Your progress is saved automatically.