CTV+CSFS: Can we reach consensus on a first step towards covenants?

The conversation around the next softfork for Bitcoin has seen significant progress, marked by growing consensus on its benefits and increased developer engagement. The open letter, supported by a notable number of signers, underscores this community momentum. However, discussions on defining the optimal stopping point for the upcoming softfork remain ongoing, with some advocating to postpone consideration of various proposals such as TXHASH, CHECKCONTRACTVERIFY, or GSR for future updates. Central to the current softfork discussion are two main enhancements: "next tx commitment" and "re-bindable signatures." These functionalities are supported by the combination of CTV and CSFS, with a notable efficiency in handling "next tx commitment" but less so for "re-bindable signatures."

Recent developments include a proposal for a refined approach that emerged during the OP_NEXT conference. This new proposal suggests replacing OP_CTV with OP_TEMPLATEHASH for direct template hash stack operations, alongside adding OP_INTERNALKEY to access internal public keys from the control block. This adjustment aims to optimize for "re-bindable signatures" while minimally impacting the "next tx commitment" functionality, enhancing overall efficiency. Notably, these operational codes are designated for tapscript context application only, leveraging OP_SUCCESS upgrade hooks for stack interactions. This restriction aligns with concerns regarding the activation of new features within legacy script contexts.

Further, the introduction of TEMPLATEHASH is limited to taproot applications, prompting a review of certain implementation decisions previously made for CTV. This includes revisiting commitments to scriptSigs and the taproot annex, reflecting an iterative approach based on community feedback. The mailing list has been updated with these technical refinements, and the BIP texts for both the newly proposed opcode and the bundle are now available for public review. This evolution of the softfork proposal aims to incorporate feedback from initial discussions, seeking further input from the community to refine and advance the project.