How CTV+CSFS improves BitVM

These covenants enable state representation, allowing for conditions such as enabling the operator to withdraw funds from the bridge unless a challenge deems the withdrawal request malicious. Traditionally, this mechanism relied on emulated covenants secured by a presigning committee, necessitating a trust assumption that introduced complexities and inefficiencies.

The introduction of CTV (CheckTemplateVerify) offers a groundbreaking solution by eliminating the need for a presigning committee, thus removing the existential honesty assumption previously required for deposit safety. This is achieved through a technique referred to as the "scriptSig Trick," which leverages CTV's ability to commit to the scriptSig of all inputs, ensuring that specific inputs become spendable only in conjunction with each other. This method notably enhances security by ensuring that even if all operators were malicious, they could not compromise the integrity of the deposits.

Furthermore, the deployment of CSFS (Compact Signature Field Scheme) in lieu of Lamport signatures significantly reduces transaction sizes by approximately tenfold. This reduction in size not only decreases the capital requirements for bridge operations but also allows for non-hardened key derivation. The latter enables the computation of an operator's public keys non-interactively, streamlining the peg-in process by minimizing the data operators need to provide. Despite these improvements, the current design still necessitates an operator signature for peg-ins, presenting a potential point of censorship. However, there is an aspiration to eventually support fully non-interactive peg-ins by modifying the bridge contract, aiming to eliminate any need for interaction in the peg-in process.

These technological strides, embodied in the CTV + CSFS proposal, signify a robust move towards more scalable, efficient, and decentralized bridges within the BitVM ecosystem. By simplifying the bridge architecture and enhancing both safety and operational efficiency, this approach marks a pivotal step forward in achieving practical, trust-minimized Bitcoin interoperability, albeit with some challenges still to be addressed.