In a large pot, heat olive oil and sauté onions over low to medium heat, until softened and golden, about 10 minutes.

Add paprika and chili powder. Stir over low heat to combine.

Stir in water, tomato paste, honey, vinegar, mustard and salt. Taste and adjust seasoning if needed. Add cayenne, if using.

Carefully transfer sauce to a food processor and blend until desired consistency is reached.