"Recursive covenant" with CTV and CSFS

In a detailed discussion on Bitcoin transaction mechanisms, several advanced concepts and their implications were explored. The conversation delved into the intricacies of using Anyprevout (APO) and CheckTemplateVerify (CTV) in creating specific types of transaction chains. With APO, two main constructs were highlighted: a trustless, finite chain utilizing pre-computed transactions with signatures committed within the scriptPubKey, and a trusted, infinite chain based on non-committed signatures that allow spending back to the same address. These methods offer alternatives to the CTV combined with CSFS approach, aiming at creating efficient and secure transaction processes.

The dialogue continued with an analysis on the feasibility of achieving a trustless, infinite chain, concluding that without full introspection capabilities akin to those provided by Elements (a sidechain of Bitcoin), such a construct remains challenging. Elements demonstrates a straightforward method for script verification, showcasing the utility of enhanced script functions for more dynamic and secure blockchain operations.

Further, the conversation touched upon the efficiency of preparing exact-sized unspent transaction outputs (UTXOs) for transaction fees, comparing this method to Child Pays For Parent (CPFP). While both require an additional transaction, the comparison reveals that CPFP might offer a slight efficiency advantage when considering the weight units (WU) saved through Pay-to-Anchor optimization as opposed to key-encumbered fee UTXOs. However, in specific scenarios like a bidding system using Blind Merged Mining (BMM), the use of CPFP could result in only winning bids paying fees, unlike the proposed method where all bids would bear transaction costs.

Additionally, the most weight unit-optimal construction, APO|SINGLE, which implies the use of Anyprevout for the Single (ACP), was mentioned as eliminating the need for extra transactions entirely, thereby presenting an efficient way to manage transaction fees with N+2 inputs and 3 outputs, similar in efficiency to CPFP but without its disadvantages for certain use cases. The potential for further optimization through combining multiple UTXOs with CTV tapleaves was also discussed, suggesting a scalable solution for large wallets looking to optimize transaction efficiency and cost.

This comprehensive examination sheds light on the ongoing efforts to enhance Bitcoin's transactional flexibility and efficiency, exploring the technical depths of current proposals and their practical implications for blockchain technology.