DLC (Discreet Log Contract)
Also · Discreet Log Contract · Oracle
A DLC is a Bitcoin contract whose payout depends on an outcome attested by an oracle, such as a price. The oracle never sees the contract or holds the funds, and the chain shows an ordinary payment.
Proposed by Tadge Dryja in 2017, a discreet log contract lets 2 parties bet on, insure or lend against an event without a trusted intermediary. They lock funds in a 2-of-2 output and pre-sign 1 settlement transaction per possible outcome, each encrypted with a value the oracle will publish only for the outcome that occurs. When the oracle signs the result, the matching transaction becomes valid.
The oracle does not know who uses its signatures, cannot steal the funds and cannot favour 1 party without lying publicly. On-chain, the contract looks like a plain multisig payment, hence “discreet”. DLCs underpin Bitcoin-collateralised loans, where the loan is settled against a price feed, and derivatives that need no exchange.
In French · DLC (Discreet Log Contract)
