Batch exchange withdrawal to lightning requires covenants

The email discusses a proposed solution for reducing the on-chain transaction size in a specific scenario. The sender mentions that while the recipient's approach could work, it would require more on-chain transaction bytes as it involves multiple transactions. The goal of the sender was to design a solution with the smallest on-chain footprint possible.

The sender's proposal suggests avoiding settlement transactions altogether and instead generating only one transaction. In the example provided, this would result in a single splice transaction with four inputs and three outputs. The inputs include E's funding input, {A,D}'s current channel input, {B,E}'s current channel input, and {C,F}'s current channel input. The outputs consist of {A,D}'s new channel output, {B,E}'s new channel output, and {C,F}'s new channel output.

The key advantage of this proposal is that the common transaction fields are paid for only once, regardless of the size of the batch. This contrasts with the recipient's approach, where these fields would be paid for N times (where N is the size of the batch). The sender believes that this could be significant in larger batches and in a high-fee future.

Overall, the proposal aims to minimize the on-chain footprint by reducing the number of transactions and optimizing the utilization of transaction fields.