That is the primary article in a collection deep diving into particular person covenant proposals which have reached some extent of maturity meriting an in depth breakdown.
CHECKTEMPLATEVERIFY (CTV), put ahead by Jeremy Rubin with BIP 119, is probably the most mature and totally fleshed out covenant proposal, not solely out of the proposals we will likely be protecting, however out of all the covenant proposals of their entirety. As I discussed within the introduction article to this collection, there are numerous issues within the ecosystem concerning covenants which can be too versatile enabling issues that wind up having very detrimental penalties for Bitcoin.
CTV was designed particularly to constrain its capabilities tightly sufficient to keep away from any of these issues. To first perceive how CTV capabilities, we have to perceive the person elements of a Bitcoin transaction.
This can be a very excessive stage view of a Bitcoin transaction. It has inputs, or unspent cash (UTXOs), and outputs, the brand new unspent cash that the transaction will create when it’s confirmed in a block. There are much more items we are going to undergo, however that is the very best stage view of a transaction’s construction.
Each transaction additionally has a model quantity subject for the entire transaction, indicating applicability of recent variations of guidelines or options. There’s additionally the marker and the flag, that are set to particular values to point the transaction makes use of Segwit. After that is the enter depend, the variety of inputs within the transaction. Then come the precise inputs.
Every enter accommodates a TXID of the transaction that created the unspent coin being spent, a VOUT which marks what output in that transaction is being spent, the scale of the ScriptSig, and the ScriptSig, which is the unlocking script proving the enter being spent is permitted by its locking script guidelines, and eventually a Sequence quantity which is used to make sure the enter being spent is following relative timelock guidelines. i.e. the enter has existed for a sure variety of blocks or size of time since its creation.
The output depend is the subsequent piece of information, the variety of outputs within the transaction. After this comes the precise outputs, which include an quantity of satoshis assigned to that output, the ScriptPubKey measurement, and the precise ScriptPubKey, which is the locking script for that output. Lastly the nLocktime subject applies a timelock worth in timestamp or block peak that applies to your entire transaction.
Every Segwit transaction additionally accommodates a Witness part, the place every enter has a corresponding witness containing a Stack Gadgets depend, what number of issues will likely be placed on the script stack, a Measurement subject for every merchandise, and the precise knowledge Merchandise to go on the stack.
How CTV Works
CTV is an opcode that permits probably the most fundamental type of introspection and ahead knowledge finishing up of all of the covenant proposals. It permits a script to take a pre-defined 32 byte hash and evaluate that in opposition to a hash of a lot of the fields of the spending transaction. If the hash derived from the precise spending transaction doesn’t match the pre-defined hash, the transaction is invalid.
The fields it commits to are:
- nVersion
- nLocktime
- Enter depend
- A hash of all of the nSequence fields
- Output depend
- A hash of all of the outputs
- Enter index (the place the enter has within the transaction, 1st enter, 2nd, and so on.)
These are all of the fields dedicated to by the CTV hash, of their entirety, and with no skill to choose and select. That is the diploma of introspection CTV allows, “does the hash of those fields within the spending transaction match the hash within the locking script of the enter being spent,” that’s it. The hash commits to primarily your entire transaction besides the precise inputs. There’s a purpose the hash doesn’t embrace the inputs. In an effort to lock an output to a 32 byte hash with CTV, you should know the hash of the transaction that you’re making certain is the one method for it to be spent. The enter locked with CTV being spent must embrace this hash as a way to be verified in opposition to CTV. That necessitates having the hash of that transaction earlier than you create the entire transaction. That isn’t attainable.
You can too nest CTV scripts, i.e. have an preliminary CTV script decide to a transaction with outputs that additionally embrace CTV scripts. That is what permits CTV to “carry ahead” knowledge. All it carries ahead in follow although is no matter knowledge is contained within the chain of transactions. You are able to do this in principle to an infinite depth, however you’re restricted in follow to a finite depth as a result of the nesting should be generated backwards ranging from the top. It’s because every stage, or “hop,” should have the hash of the transaction transferring to the subsequent one, in any other case you possibly can’t create the locking script within the first place. Should you don’t already know the subsequent transaction, you possibly can’t generate the earlier one.
What Is CTV Helpful For
CTV means that you can limit an output in order that it might probably solely be spent, in keeping with consensus guidelines, by an actual pre-defined transaction. A few of you is likely to be asking what the large deal is, we will already pre-sign transactions. If the extent of introspection is so restricted that it might probably solely accomplish one thing we will already just do pre-signing, what’s the worth add?
First, pre-signed transactions at all times go away open the potential of the keyholder(s) signing new transactions and spending these cash differently. It’s a must to belief that the keyholder is not going to do that, or will delete the important thing wanted to signal with (which you additionally must belief them on). CTV removes that belief fully. As soon as the spending transaction is outlined and the output locked to that CTV hash is created, there isn’t a chance of being spent one other method, enforced by consensus.
At the moment the one method round that belief is to be concerned in pre-signing transactions your self utilizing multisig. Then you definately could be fully sure that until you select to signal one your self, no different legitimate transaction spending a coin differently could be created. The issue is the extra persons are concerned, the harder and unreliable coordinating everybody to pre-sign a transaction on the identical time turns into. Previous small sizes it turns into a completely impractical downside to resolve reliably.
CTV provides a method for individuals to know a set of transactions is dedicated with out everybody having to get on-line on the identical time to signal them. It vastly simplifies the coordination course of by permitting everybody to get the wanted data to anybody else every time they’ll, and as soon as that particular person has everybody’s data they’ll create the chain of CTV transactions with out anybody else’s involvement, and everybody can confirm and be sure that the proper final result is the one attainable one.
That’s extremely priceless by itself, however CTV may also allow much more priceless issues together with different opcodes, which we’ll see within the subsequent article.
Closing Ideas
CTV is a tightly restricted covenant that permits a level of introspection and ahead knowledge carrying that’s so restricted it doesn’t exceed the precise performance of something that may be performed with pre-signed transactions. The worth proposition shouldn’t be in enabling new performance in its personal proper, however drastically bettering the effectivity, scalability, and safety ensures of what could be constructed at present utilizing pre-signed transactions. This alone is an enormous profit to virtually each at present deployed protocol utilizing pre-signed transactions.
Listed below are a few of the tasks demonstrating how completely fleshed out and explored this specific covenant is in comparison with the others:
- A fundamental fee pool instance by stutxo.
- A CTV vault implementation by James O’Beirne, who went on to suggest OP_VAULT (which nonetheless makes use of CTV).
- A proof-of-concept port of the pre-signed transaction primarily based Ark implementation from Second by Steven Roose to make use of CTV as an alternative.
- The Sapio Language by Jeremy Rubin himself, the next stage language for constructing contracts with CTV (additionally supporting using pre-signed transactions as an alternative).
- Timeout Bushes, a proposal for a really fundamental coinpool design by John Regulation.
- Quite a few different attainable protocols, reminiscent of optimized Discreet Log Contracts (DLCs), non-interactive Lightning channels one get together might open with out the opposite, and even decentralized methods for miners to pool collectively.
CTV is an extremely mature proposal at this level, with a excessive worth add, and no danger of enabling something driving the issues round covenants. This could not solely be very severely thought of, however in my private opinion ought to have been activated years in the past.