Soft-Fork/Covenant Dependent Layer 2

[BlackHatCoiner]

An interesting review on covenant dependent layer 2 was published today by Peter Todd. I think he raises some good points: https://petertodd.org/2024/covenant-dependent-layer-2-review.

In my mind, covenants is the missing piece for lightning's growth and what would probably increase the adoption of Bitcoin as currency exponentially. Currently, it's not possible to receive an off-chain Bitcoin transaction offline, without having sufficient incoming capacity, let alone without an UTXO. These limitations and complexities drive people into custodial solutions, like the Wallet of Satoshi. With covenants, other L2 become implementable, like Ark and Coinpool, which inherit the advantages of LN without the drawbacks. (Or at least, with other drawbacks inherited by server providers, instead of users.)

The author concludes that among all potential softforks, OP_CTV would come with the best trade-offs.

[d5000]

Very interesting, thanks for linking!

I would appreciate an ELI5 (or maybe ELI12) of the different covenant-style proposals and their use cases. Maybe we can use this thread for that purpose?

One for example I hadn't heard about is OP_EVICT, proposed here. It is discussed in Todd's text because it could make CoinPools and channel factories (=Lightning with multi-user channels) more efficient.

I try to resume it: It allows a participant of a multisig to be "evicted" from that contract. The main use case is if a participant becomes unresponsive, instead of having to "dissolve" the multisig, the unresponsive participant can simply be excluded, with his funds being returned to him, and the rest of the participants can continue inside the contract. In other words, it would transform a N-of-N into a (N-1)-of-(N-1) multisig without having to re-arrange the multisig completely. (correct me if there's an error).

[Wind_FURY]

The author concludes that among all potential softforks, OP_CTV would be come with the best trade-offs.

Someone who's technical and who truly understands OP_CTV and its pros and cons should start a topic to educate the community on what's actually safer/more secure/more feasible for "covenants" - OP_CTV of OP_CAT. Because from a community support standpoint, I see that the people behind OP_CAT are louder/has more support. But the fact that Udi supports it, makes me cynical on what's actually better.

ELI-5 OP_CAT vs. OP_CTV topic for non-technical people?