Scaling Noncustodial Mining Payouts with CTV

The discussion focuses on the significant advancements that CheckTemplateVerify (CTV) brings to bitcoin, particularly in terms of mining payouts. Non-custodial mining payouts are defined as newly created Unspent Transaction Outputs (UTXOs) in the coinbase of a bitcoin block that only the intended recipient can spend. Most mining pools, with Ocean being a notable exception, send coinbase outputs to a custodial wallet, from which payouts are made to miners. This practice exposes miners to the risk of the pool operator not transferring the bitcoin to their wallets. Ocean, however, operates on a non-custodial basis for miners receiving coinbase outputs, though it faces limitations in the number of non-custodial payouts due to ASIC appliance firmware limits and the desire to keep the coinbase small to maximize fee revenue.

CTV addresses these limitations by enabling an unlimited number of non-custodial payouts in each block, thereby scaling trustless mining payouts without significantly affecting total block space usage. This is crucial as trusted systems pose security vulnerabilities, echoing Satoshi's emphasis on trustlessness in the original Bitcoin whitepaper. By improving the trust model around bitcoin mining through CTV, the proposal aims to enhance the foundational trust model of bitcoin itself.

Furthermore, the post clarifies that concerns about scalability should be distinguished between the entire bitcoin system and individual mining pools. The focus here is on scaling trustless mining payouts under existing consensus rules to bolster bitcoin's long-term success as a self-sovereign monetary system. Mining pool centralization is identified as a critical threat to bitcoin, making the development and implementation of solutions like CTV essential for decentralization and security.

Historical context is provided to underscore the importance of understanding and addressing the motivations behind major actors in the bitcoin ecosystem. The segwit soft fork, which made covert ASICboost obsolete, is cited as evidence that modifying bitcoin is feasible and necessary for its evolution. Links to discussions and evidence supporting these points are included, such as Greg Maxwell's reverse engineering of a Bitmain ASIC appliance which demonstrated the capability for covert ASICboost (Greg's initial claim about reverse engineering the ASIC), a Reddit thread confirming this (Reddit thread), and the release of a patch by Bitmain to allow bitcoin miners to activate overt ASICboost (Bitmain's release). These examples highlight the potential for technological and procedural improvements to resolve longstanding issues within the bitcoin mining community.