like all other "incentive-driven honesty" proposals, it only works if the value locked in the bonds is greater than thevalue locked in the covenants.   but that's a reasonable restriction for many "l2" use cases, where the purpose of l2 is to enable low-valued "vtxo's"  that allow an emulated self custody of small amounts that would otherwise be too expensive to move on-chain<div><br />some analysis of the relationship between the bond lock value and the maximum "incentive-safe"  covenant value, and the fees the oracles are paid vs the loss of liquidy needs to be done in order to drive the incentives home both for would-be oracles and would-be users.</div><div><br /></div><div>this is unlikely, for example, to be valueable for any vault-ing use case, but should be possible to enable ark2, enigma-network and other protocols designed to falicitate small-value-transactions-at-scale  <br /><br /></div><div><div dir="auto">On Tuesday, November 26, 2024 at 7:21:03 PM UTC-8 jeremy wrote:<br /></div><blockquote style="margin: 0px 0px 0px 0.8ex; border-left: 1px solid rgb(204, 204, 204); padding-left: 1ex;"><div><span style="color: rgb(0, 0, 0);">Esteemed Bitcoin Developers,</span><br /></div><div><p style="color: rgb(0, 0, 0);">Sharing below an approach to implementing Bitcoin covenants without requiring native protocol changes. The approach uses covenant emulators signing servers.</p><p style="color: rgb(0, 0, 0);">Unlike approaches to date for covenant emulation, the oracle signers put up bonds to BitVM auditors subject to a BITVM style fraud proof, whereby their funds can be stolen if the emulator oracle ever signs a transaction in violation of the covenant rules.</p></div>you can find the paper here: <a href="https://rubin.io/bitcoin/2024/11/26/unfed-covenants/" target="_blank" rel="nofollow">https://rubin.io/bitcoin/2024/11/26/unfed-covenants/</a><br /><div><br /></div><div>Regards,</div><div><br /></div><div>Jeremy</div></blockquote></div>

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