Covenant : a normally formal, solemn, and binding settlement.
This phrase has change into one of the crucial charged phrases within the Bitcoin area. They’re the most effective factor since sliced bread. They’re essentially the most harmful factor for the reason that atom bomb. They aren’t actually going to do something to scale Bitcoin, however they’re neat.
Everybody has a totally totally different angle in the direction of them. Now we have the pro-faction, the anti-faction, the ambivalent faction. To make issues worse, covenant is frankly a really imprecise time period in its description of mature and concrete proposals to the protocol that might be categorized as covenants.
The levels of distinction between the performance of various proposals which have been put ahead is big. A few of them create completely new design areas for what it’s potential to construct on high of Bitcoin, whereas others strictly talking don’t add any new performance in any respect, they merely optimize issues which might be already at the moment potential 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 so forth. 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 massive reservations about including a brand new approach to “lock” bitcoins that may self-propagate and guarantee future cash are restricted in a similar way. Many individuals have considerations about this getting used to break fungibility or institute censorship regimes.
I really feel it essential to level out that each of these items will be achieved 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 mentioned, it’s nonetheless vital 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 as a way to apply restrictions to how cash are spent, introspection and ahead information carrying.
Introspection is the flexibility to examine totally different components of the transaction that’s being evaluated whereas attempting to spend a particular coin. So for example, if you wish to limit a coin in order that it needs to be spent to a particular handle, you might have 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 flexibility to check totally different components of the spending transaction towards restrictions included within the script being evaluated. The extra granular you will get with introspection regarding which explicit components of a transaction you possibly can look at, the extra highly effective it turns into.
Ahead information carrying is said 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 achieved through the use of introspection to limit sure components of the transaction so tightly that they need to embody the precise desired information or they’re invalid. The extra highly effective introspective functionality you might have, 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 sequence of articles to come back over the following few weeks all the key covenant proposals which might be in a mature state, have obtained current curiosity, or are conceptually critically vital sufficient that builders agree on their usefulness however not but a concrete design. This received’t be 100% full, however it will likely be comparatively complete. A number of of them additionally will not be strictly covenants per se, however compose very tightly with them.
These will embody:
CHECKTEMPLATEVERIFY CHECKSIGFROMSTACK TXHASH OP_VAULT CHECKCONTRACTVERIFY CAT TWEAKVERIFY
