Feedback-ID: i525146e8:Fastmail
Date: Wed, 24 Jan 2024 19:31:07 +0000
From: Peter Todd <pete@petertodd.org>
To: bitcoin-dev@lists.linuxfoundation.org
Message-ID: <ZbFle6n0Zu3yUV8o@petertodd.org>
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Subject: [bitcoin-dev] CheckTemplateVerify Does Not Scale Due to UTXO's
 Required For Fee Payment
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CheckTemplateVerify(1) is a proposed covenant opcode that commits to the
transaction that can spend an output. Namely, # of inputs, # of outputs,
outputs hash, etc. In practice, in many if not most CTV use-cases intended =
to
allow multiple parties to share a single UTXO, it is difficult to impossibl=
e to
allow for sufficient CTV variants to cover all possible fee-rates. It is
expected that CTV would be usually used with anchor outputs to pay fees; by
creating an input of the correct size in a separate transaction and includi=
ng
it in the CTV-committed transaction; or possibly, via a transaction sponsor
soft-fork.

This poses a scalability problem: to be genuinely self-sovereign in a proto=
col
with reactive security, such as Lightning, you must be able to get transact=
ions
mined within certain deadlines. To do that, you must pay fees. All of the
intended exogenous fee-payment mechanisms for CTV require users to have at
least one UTXO of suitable size to pay for those fees.

This requirement for all users to have a UTXO to pay fees negates the
efficiency of CTV-using UTXO sharing schemes, as in an effort to share a UT=
XO,
CTV requires each user to have an extra UTXO. The only realistic alternativ=
e is
to use a third party to pay for the UTXO, eg via a LN payment, but at that
point it would be more efficient to pay an out-of-band mining fee. That of
course is highly undesirable from a mining centralization perspective.(2)

Recommendations: CTV in its current form be abandoned as design foot-gun. O=
ther
convenant schemes should be designed to work well with replace-by-fee, to a=
void
requirements for extra UTXOs, and to maximize on-chain efficiency.

1) https://github.com/bitcoin/bips/blob/deae64bfd31f6938253c05392aa355bf6d7=
e7605/bip-0119.mediawiki
2) https://petertodd.org/2023/v3-transactions-review#anchor-outputs-are-a-d=
anger-to-mining-decentralization

--=20
https://petertodd.org 'peter'[:-1]@petertodd.org

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