Bitcoin PIPEs v2

The discussion revolves around the financial viability and technical mechanisms of implementing covenants in multiparty offchain cryptocurrency systems, particularly focusing on payment channels. The cost of renting cloud infrastructure for covenant execution is highlighted as a significant expense, estimated between $100-200 per transaction. This cost factor becomes a critical consideration when applied to high-frequency cryptocurrency transfer systems, where each state transition might incur a fee of 150,000 sats. Despite the high costs, the potential for integrating technologies such as SuperScalar and channel factories is suggested as a way to mitigate expenses. These technologies could enable a structure where detailed payments are handled in a classic 2-party mechanism at the base level, while a higher layer, updated less frequently, manages batched liquidity actions that might justify the 150,000 sats cost due to their rarity.

An intriguing aspect of covenant implementation is the confidentiality of the secret key (sk) during setup, ensuring no party learns it, which suggests a multiparty setup process. Questions are raised about the complexity and resource demands of this setup, especially regarding whether it necessitates all parties to be online simultaneously. Covenant opcodes are presented as a solution to avoid the need for simultaneous online presence by allowing each interested party to provide public keys independently, facilitated by an online actuary. This approach contrasts with other setups that might require all parties to interactively be online at the same time, emphasizing the efficiency and practicality of using covenant opcodes in reducing the logistical challenges of synchronous online participation among all stakeholders involved.