Subject: Re: [bitcoin-dev] CheckTemplateVerify Does Not Scale Due to UTXO's Required For Fee Payment

From: jlspc <[email-masked]>
Date: Thu, 25 Jan 2024 17:49:26 +0000

Hi Peter,

If feerate-dependent timelocks (FDTs) (1) are supported, it would be possible to use CTV to define a transaction with a fixed fee and no anchor outputs, as long as it's racing against a transaction with an FDT.

Regards,
John

(1) https://lists.linuxfoundation.org/pipermail/lightning-dev/2023-December/004254.html

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On Wednesday, January 24th, 2024 at 11:31 AM, Peter Todd via bitcoin-dev <[email-masked]> wrote:

> 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 impossible 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 including
> 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 protocol
> with reactive security, such as Lightning, you must be able to get transactions
> 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 UTXO,
> CTV requires each user to have an extra UTXO. The only realistic alternative 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. Other
> convenant schemes should be designed to work well with replace-by-fee, to avoid
> requirements for extra UTXOs, and to maximize on-chain efficiency.
> 
> 1) https://github.com/bitcoin/bips/blob/deae64bfd31f6938253c05392aa355bf6d7e7605/bip-0119.mediawiki
> 2) https://petertodd.org/2023/v3-transactions-review#anchor-outputs-are-a-danger-to-mining-decentralization
> 
> --
> https://petertodd.org 'peter'[:-1]@petertodd.org
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