Question about OP_CTV and Non-Recursive Covenants

The OP_CTV proposal is a topic of interest for those exploring advancements in Bitcoin's functionality, particularly concerning covenants. It is designed to allow users to commit to the outputs of a transaction without being able to commit to its inputs. This design choice effectively prevents the creation of recursive covenants. The inability to commit to transaction inputs presents challenges for executing complex transactions, such as creating multiple buy offers for unique unspent transaction outputs (UTXOs) within a single Partially Signed Bitcoin Transaction (PSBT). Currently, to make an offer on multiple UTXOs, a separate PSBT must be created for each UTXO, a limitation that complicates transactions for protocols like runes, which aims to enable trustless PSBT offers.

The question arises whether it would be feasible or beneficial to allow users to commit to the location of an input, defined by its block height, transaction index, and output index, rather than the input itself. While this approach would not enable recursive covenants due to the requirement of knowing the mined location of an input – information that cannot be predetermined – it introduces its own set of complications. These include increased complexity in script validation, the introduction of non-txid dependencies, and potential issues arising from blockchain reorganizations that might alter the assumed location of an input. Despite these challenges, such functionality could theoretically address the need for making multi-UTXO offers without paving the way for recursive covenants.

This discussion also touches upon broader considerations regarding the development and implementation of new features on the Bitcoin network. The exploration of such ideas reflects a keen interest in expanding Bitcoin's utility beyond simple transactions, potentially facilitating the issuance of stocks and other securities natively on the platform. This vision aligns with a broader belief in the potential for Bitcoin-native capital markets to enhance the cryptocurrency's value proposition, especially for companies incorporating Bitcoin into their treasury strategies. Nonetheless, the exploration of proposals like OP_CTV remains in the early stages, with ongoing debate and analysis needed to fully understand the implications and technical feasibility of such innovations.