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 essentially the most mature and absolutely fleshed out covenant proposal, not solely out of the proposals we can be masking, however out of all the covenant proposals of their entirety. As I discussed within the introduction article to this collection, there are a lot of issues within the ecosystem relating to 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 components 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’ll undergo, however that is the very best stage view of a transaction’s construction.
Each transaction additionally has a model quantity discipline for the entire transaction, indicating applicability of recent variations of guidelines or options. There may be 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 dimensions of the ScriptSig, and the ScriptSig, which is the unlocking script proving the enter being spent is allowed 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 knowledge, the variety of outputs within the transaction. After this comes the precise outputs, which comprise 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 discipline applies a timelock worth in timestamp or block top that applies to your complete transaction.
Every Segwit transaction additionally accommodates a Witness part, the place every enter has a corresponding witness containing a Stack Objects depend, what number of issues can be placed on the script stack, a Measurement discipline for every merchandise, and the precise knowledge Merchandise to go on the stack.
How CTV Works
CTV is an opcode that permits essentially 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 examine that towards 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 forth.)
These are all of the fields dedicated to by the CTV hash, of their entirety, and with no capability 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 basically your complete transaction besides the precise inputs. There’s a motive the hash doesn’t embody the inputs. In an effort to lock an output to a 32 byte hash with CTV, it’s essential to know the hash of the transaction that you’re guaranteeing is the one method for it to be spent. The enter locked with CTV being spent should embody this hash as a way to be verified towards CTV. That necessitates having the hash of that transaction earlier than you create the entire transaction. That’s not potential.
You may as well nest CTV scripts, i.e. have an preliminary CTV script decide to a transaction with outputs that additionally embody 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 idea to an infinite depth, however you’re restricted in follow to a finite depth as a result of the nesting have to be generated backwards ranging from the tip. It’s because every stage, or “hop,” will need to 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. If you happen to don’t already know the subsequent transaction, you possibly can’t generate the earlier one.
What Is CTV Helpful For
CTV permits you to prohibit an output in order that it may solely be spent, in line with consensus guidelines, by a precise pre-defined transaction. A few of you is perhaps asking what the large deal is, we will already pre-sign transactions. If the extent of introspection is so restricted that it may solely accomplish one thing we will already just do pre-signing, what’s the worth add?
First, pre-signed transactions all the time go away open the potential for the keyholder(s) signing new transactions and spending these cash differently. You need to belief that the keyholder is not going to do that, or will delete the important thing wanted to signal with (which you additionally need to belief them on). CTV removes that belief solely. 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.
Presently the one method round that belief is to be concerned in pre-signing transactions your self utilizing multisig. You then could be utterly sure that except 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 drawback to resolve reliably.
CTV provides a method for folks to know a set of transactions is dedicated with out everybody having to get on-line on the identical time to signal them. It tremendously simplifies the coordination course of by permitting everybody to get the wanted data to anybody else at any time when they will, and as soon as that particular person has everybody’s data they will create the chain of CTV transactions with out anybody else’s involvement, and everybody can confirm and make sure that the right end result is the one potential one.
That’s extremely invaluable by itself, however CTV may also allow much more invaluable 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 achieved with pre-signed transactions. The worth proposition will not be in enabling new performance in its personal proper, however drastically enhancing the effectivity, scalability, and safety ensures of what could be constructed presently utilizing pre-signed transactions. This alone is a large profit to virtually each presently deployed protocol utilizing pre-signed transactions.
Listed below are among the tasks demonstrating how completely fleshed out and explored this explicit 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 based mostly Ark implementation from Second by Steven Roose to make use of CTV as a substitute.
- The Sapio Language by Jeremy Rubin himself, the next stage language for constructing contracts with CTV (additionally supporting using pre-signed transactions as a substitute).
- Timeout Timber, a proposal for a really fundamental coinpool design by John Regulation.
- Quite a few different potential protocols, akin to optimized Discreet Log Contracts (DLCs), non-interactive Lightning channels one celebration 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 threat 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.