Cascading DLCs: Chaining Bitcoin Contracts with Oracle Attestation Scalars

The whitepaper shared introduces a concept known as Cascading Discreet Log Contracts (cDLCs), which employs oracle attestations as a pivotal element in activating contract agreements within the Bitcoin framework. It describes the usage of an oracle's attestation for a specific outcome (x), represented by equations ( s_x = r_o + H(R_o | V | x)v \pmod n ) and ( S_x = s_xG = R_o + H(R_o | V | x)V ). These attestations are integral in facilitating bridge transactions (B_e) that transition funds from a parent DLC outcome to a child DLC funding output, employing Schnorr adaptor signatures in the process.

The mechanism detailed explains how, prior to the oracle’s publication of (s_x), completing (B_e) would necessitate either forging Schnorr signatures or discovering (\log_G(S_x)). However, once (s_x) is revealed, any party possessing the prepared adaptor state can complete the transaction, effectively using the same scalar (s_x) to finalize both the parent DLC outcome signatures and the bridge transaction that funds the child DLC. This leverages native Bitcoin constructs like ordinary signatures and timelocks without necessitating new opcodes, covenants, or consensus changes.

The construction, security boundaries, assumptions on state-retention, and the algebra involved are thoroughly formalized in the attached paper, which also undergoes machine verification in Ada/SPARK to ensure its robustness and reliability. Further details and the methodological framework can be accessed through the GitHub repository provided here: repo and the direct link to the whitepaper here: Whitepaper. The authors of this document seek peer review to refine and verify the proposed model within the broader cryptographic and developer community.