How CTV+CSFS improves BitVM bridges

The transaction graph depicted outlines a mechanism designed to optimize collateral utilization by operators within a specific system. This system mandates operators to provide signatures corresponding to the red arrows shown in the diagram at the deposit phase. For the process to advance to the stage where an operator can issue a "ready-to-reimburse transaction," each kickoff event must reach a state of finalization. Such finalization can be achieved through either a "challenge timeout transaction" or a "disprove timeout transaction." A notable feature of this setup is its capacity to handle multiple kickoff events concurrently, thereby enabling the processing of several withdrawals simultaneously using just a single collateral source. However, it's crucial to highlight that if any of the kickoff attempts are successfully disproven, this triggers an immediate halt to all reimbursement activities.

The system currently faces a couple of significant challenges that limit its full potential. Firstly, there is a requirement for a Bitcoin light client that serves the purpose of verifying both the inclusion of payout transactions and the current state of the sidesystem. While work is ongoing to address this need, it introduces a layer of trust-minimized assumptions that are imperative for maintaining safety within the system. Additionally, there exists the issue concerning the publication of all operators' signatures. For the sake of data availability, these signatures must be made accessible; however, the Bitcoin network, with its constrained block space, poses limitations on this front, suggesting the necessity for alternative solutions to ensure efficient and secure operations.