Damus
niftynei() 🇺🇸💸🧡 profile picture
niftynei() 🇺🇸💸🧡
@niftynei
covenants scale bitcoin by making promises to pay you. typically these promises are ones that you can verify because they’re written into the chain

those promises risk becoming “unenforceable” where youve been promised bitcoin that is forever uneconomical to ever claim outright. It’s worth paying attention to the talk about how easy it is to add fees later to different covenants designs, etc. who pays the fees to make good on that “promise” of the bitcoin belonging to you is generally an open question, and the ability to do so (and how) is under active research/exploration right now (imo)

an old theme of layer-2 design is “whos permission do you need to exit”; covenants add the additional question of “how much does it cost to exit”

a lot of the L2 protocols that “use” covenant primitives (in whatever form) rely on the idea of swapping ownership of those promises. how you update the underlying contracts to reflect that changed ownership is where the protocol design comes in

maybe something worth using as a lens when comparing different protocols that rely on covenants “to scale”
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niftynei() 🇺🇸💸🧡 · 113w
lightning protocol devs are again at a pretty prime spot wrt understanding these challenges and trade offs, as theyve been actively building systems with these constraints for the past number of years The LN network is a very rudimentary covenants system, no body likes it when they have to pay to r...
Bitcoin Sikho · 113w
So these tx’s are similar to utxos that are small and fees are higher than the sats you’re trying to move? So covenants aren’t useful in their current state to scale L1?