Slice the squash, discarding both ends, slicing the smaller ends into 1/4" rounds and the larger sections into half moons. Peel and half the onion and cut into ¼-inch slices.
Place the bacon into a large cold skillet (to properly render the fat), then turn the heat up to medium. Cook the bacon until desired crispiness. Remove the bacon and set aside on a paper towel-lined plate.
Add the sliced onions to the pan with the hot bacon fat and sauté until they start to soften, about 3 minutes. Add the butter and stir until melted, then add the squash and cook, stirring occasionally, for 6 minutes more until it starts to soften around the edges.
Stir the chicken base into the water until dissolved, then add it to the skillet. Add the butter and a pinch of sugar (optional but brings out the sweetness of the squash). Cover and continue cooking for 8 minutes more, stirring occasionally.
While the squash simmers, chop the bacon into small pieces.
Uncover and cook for 5-6 minutes more to evaporate some of the liquid, or to desired tenderness.
Season with salt and pepper, to taste. Sprinkle the crumbled bacon on top just before serving, or serve it on the side.