Start by caramelizing the onions. Add about 2 tbsps of oil to a skillet over medium heat. Place thinly sliced onions into the skillet and add a pinch of salt. Allow the onions to cook for 8-10 minutes, then add 2 tbsps brown sugar. Continue to cook for 5 minutes, then add 1/2 cup of water. Allow the water to cook down and evaporate, then add another 1/2 cup of water and allow it to cook off. Repeat until onions are soft.
Once the onions have softened and become caramelized and jammy, add honey, liquid smoke, worcestershire sauce, ketchup, apple cider vinegar, remaining brown sugar, smoked paprika, chili powder, cayenne pepper, black pepper, and yellow mustard. Stir to combine.Add butter and stir until the butter has melted.
Add sauce to a food processor and blend until smooth. You can also use an immersion blender if you prefer.
Let the sauce come to room temperature and store in an airtight container.
Notes
Add a little bit of red pepper flakes to make this into a more of a sweet and spicy bbq sauce.
Store this sauce in a sealed container. It has a shelf life of 6 months in the refrigerator and about 2 months at room temperature.
When caramelizing the onions, make sure that you're patient and allow them to cook down until they're soft and jammy.