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 be come with the best trade-offs.
