Covenant : a normally formal, solemn, and binding settlement.
This phrase has turn out to be one of the vital charged phrases within the Bitcoin area. They’re one of the best factor since sliced bread. They’re essentially the most harmful factor because the atom bomb. They aren’t actually going to do something to scale Bitcoin, however they’re neat.
Everybody has a totally totally different perspective in direction of them. We have now the pro-faction, the anti-faction, the ambivalent faction. To make issues worse, covenant is frankly a really obscure time period in its description of mature and concrete proposals to the protocol that might be categorised as covenants.
The levels of distinction between the performance of various proposals which have been put ahead is gigantic. A few of them create fully new design areas for what it’s attainable to construct on high of Bitcoin, whereas others strictly talking don’t add any new performance in any respect, they merely optimize issues which can be already at the moment attainable with a big diploma of complexity and overhead.
Let’s create a brand new definition particular to Bitcoin.
Covenant : any script that ensures some, or all, of the outputs created by a transaction spending an enter with a covenant script should match sure specified standards for the spending transaction to be consensus legitimate.
So in much less strict phrases, if a Bitcoin script at the moment restricts who can spend a coin by demanding an authorization proof, i.e. a cryptographic signature, or when it may be spent, i.e. after a timelock expires or the spender can present the preimage to a hash, a covenant script restricts how it may be spent, i.e. to who, how a lot to which individual, and many others. A covenant script may even limit a coin in order that it have to be spent to a different covenant script.
That final half is the core of what has made covenant such a contentious phrase. Many individuals have giant reservations about including a brand new solution to “lock” bitcoins that may self-propagate and guarantee future cash are restricted similarly. Many individuals have considerations about this getting used to wreck fungibility or institute censorship regimes.
I really feel it essential to level out that each of this stuff will be completed proper now, with no covenant script functionality, just by utilizing multisig. Any authority can refuse to permit withdrawals to be processed from exchanges except they’re to a 2-of-2 multisig the place that authority holds one key. From there they will merely refuse to signal transactions sending to addresses the place they don’t maintain a required key, and set up no matter blacklist or whitelist scheme they desired opaquely and fully off-chain.
That stated, it’s nonetheless necessary for Bitcoin customers to have a grasp and understanding of the distinction of energy and suppleness between all of the totally different covenant proposals that at the moment exist.
There are two core issues that covenants search to allow in an effort to apply restrictions to how cash are spent, introspection and ahead information carrying.
Introspection is the power to examine totally different components of the transaction that’s being evaluated whereas making an attempt to spend a particular coin. So as an example, if you wish to limit a coin in order that it must be spent to a particular handle, you have got to have the ability to examine the handle specified within the enter’s covenant script to the handle specified within the output of the transaction spending it. Opcodes that allow introspection are ones that give us the power to match totally different components of the spending transaction in opposition to restrictions included within the script being evaluated. The extra granular you may get with introspection regarding which specific components of a transaction you possibly can look at, the extra highly effective it turns into.
Ahead information carrying is expounded to introspection, and in some ways a consequence of it, that permits you to guarantee some piece of data is carried ahead and included in every new covenant script in order that it may be used within the subsequent analysis of the covenant script. That is completed by utilizing introspection to limit sure components of the transaction so tightly that they need to embrace the precise desired information or they’re invalid. The extra highly effective introspective functionality you have got, the extra flexibly you possibly can carry information ahead, and the extra flexibly you need to use that information.
That is simply the primary introduction to a collection of articles to return over the subsequent few weeks all the foremost covenant proposals which can be in a mature state, have obtained latest curiosity, or are conceptually critically necessary sufficient that builders agree on their usefulness however not but a concrete design. This received’t be 100% full, however will probably be comparatively complete. A couple of of them additionally will not be strictly covenants per se, however compose very tightly with them.
These will embrace:
CHECKTEMPLATEVERIFY CHECKSIGFROMSTACK TXHASH OP_VAULT CHECKCONTRACTVERIFY CAT TWEAKVERIFY
