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Author: Admin | 2025-04-28
For any simple covenant where the outcomes are known ahead of time, such as CHECKTEMPLATEVERIFY (CTV), users can immediately have the oracle pre-sign the transactions enforcing the covenant and simply delay using them until necessary. An important scenario to consider requiring extra functionality is state based covenants, such as rollups, that progress regularly and have an actual state (the current balance of users) to keep track of. In the case of such covenants, the transactions the oracle signs must commit to the current state of the covenant using OP_RETURN so that the oracle can efficiently verify each transaction updating the rollup or other system without having to download witness data for the entire history. This is to keep the oracle from having to store state locally themselves, which as noted above creates risks. In the long term the data requirements of oracles can be optimized by using zero knowledge proofs, so that the oracle can simply verify a proof that the transaction they are being asked to sign follows the rules of the covenant without having to verify the raw witness data for larger more complex covenants. Again though, in the case of systems like rollups, care must be taken in designing them to guarantee that data required to exit the system is made available to users so they have it in their possession if they need to contact the oracle directly to reclaim their funds. The BitVM BondSo far the scheme is entirely trusted. You are essentially just giving someone else your money and hoping they can be trusted to enforce the conditions of arbitrary covenants. By modifying the scheme above slightly, this can be secured with a crypto-economic incentive rather than pure trust. Above it was described how OP_RETURN is required to be used to track state for stateful covenants. OP_RETURN can also be used to publish the witness data of any covenant transactions to prove the conditions were correctly fulfilled. A BitVM circuit can be constructed to verify whether a transaction signed by the oracle successfully matches the conditions of the covenant it is enforcing. Remember that the key itself that is generated and funds sent to commits to the conditions of any covenant being enforced. Meaning that data, as well as a transaction being spent from the address, can be fed into a BitVM instance. Oracles can then be required to post a collateral bond with
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