Question about OP_CTV and Non-Recursive Covenants

The discussion revolves around the concept of implementing covenants in blockchain transactions that are capable of committing to the mined location of a spent outpoint, rather than the outpoint itself, irrespective of its location. This idea is evaluated in the context of concerns previously raised by Maxwell regarding the potential for certain bitcoins (sats) to become permanently encumbered, thus affecting their future usability and value.

The proposed covenant mechanism would allow for referencing the mined location (for example, attributes like nVersion or nTime from a block header) of an outpoint up until a specific block in the chain (denoted as B.i, where i represents the inclusion block). The practical application of this concept is illustrated with a hypothetical sequence of blocks (B1 <- B2 <- B3), suggesting that such a covenant could refer back to any block up to and including B.i in the chain.

However, there are significant concerns associated with this approach. One major issue is the possibility of creating adversarial contracts aimed at penalizing certain miners by withholding rewards based on specific conditions (e.g., if nVersion matches a particular value, then withhold the coinbase output of B2). This could potentially destabilize the miner network by introducing unpredictable and unfair penalties.

Furthermore, the adoption of such a covenant system could threaten the linearity and finality of blockchain progress. These properties are crucial for maintaining the integrity and reliability of the blockchain, ensuring that all transactions are processed in a straightforward, unchangeable manner. Introducing mechanisms that could compromise these aspects of the blockchain might not be advisable, as it could undermine the technology's foundational principles and its operational stability.