Covenant : a normally formal, solemn, and binding settlement.
This phrase has turn out to be probably the most charged phrases within the Bitcoin house. They’re the most effective 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 completely different angle in the 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 labeled as covenants.
The levels of distinction between the performance of various proposals which were put ahead is big. A few of them create totally new design areas for what it’s doable to construct on high of Bitcoin, whereas others strictly talking don’t add any new performance in any respect, they merely optimize issues which are already presently doable 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 presently 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 prohibit 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 option to “lock” bitcoins that may self-propagate and guarantee future cash are restricted in a similar way. Many individuals have issues about this getting used to break fungibility or institute censorship regimes.
I really feel it essential to level out that each of this stuff might 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’ll 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 completely different covenant proposals that presently 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 knowledge carrying.
Introspection is the flexibility to examine completely 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 prohibit a coin in order that it needs to be spent to a particular tackle, you may have to have the ability to examine the tackle specified within the enter’s covenant script to the tackle specified within the output of the transaction spending it. Opcodes that allow introspection are ones that give us the flexibility to check completely different components of the spending transaction towards restrictions included within the script being evaluated. The extra granular you may get with introspection regarding which explicit components of a transaction you possibly can study, the extra highly effective it turns into.
Ahead knowledge carrying is expounded to introspection, and in some ways a consequence of it, that means that you can 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 have to embody the precise desired knowledge or they’re invalid. The extra highly effective introspective functionality you may have, the extra flexibly you possibly can carry knowledge ahead, and the extra flexibly you should utilize that knowledge.
That is simply the primary introduction to a collection of articles to come back over the following few weeks taking a look at all the most important covenant proposals which are in a mature state, have acquired current curiosity, or are conceptually critically necessary sufficient that builders agree on their usefulness however not but a concrete design. This gained’t be 100% full, however it will likely be comparatively complete. A couple of of them additionally aren’t strictly covenants per se, however compose very tightly with them.
These will embody:
- CHECKTEMPLATEVERIFY
- CHECKSIGFROMSTACK
- TXHASH
- OP_VAULT
- CHECKCONTRACTVERIFY
- CAT
- TWEAKVERIFY
