CheckTemplateVerify Does Not Scale Due to UTXO's Required For Fee Payment

CheckTemplateVerify Does Not Scale Due to UTXO's Required For Fee Payment

Original Postby Brandon Black

Posted on: January 27, 2024 06:28 UTC

In a recent correspondence, the discussion revolved around concerns with CTV-based protocols used for scaling Bitcoin and Lightning networks.

The issue of users requiring a UTXO to pay exit fees was addressed, suggesting that if a user lacks sufficient balance to cover these fees, they are unlikely to attempt exiting the protocol. In such cases, their in-protocol balance can be utilized to settle fees.

A proposed solution for users aiming to exit involves using ephemeral anchors within the transaction tree. Upon departure, a user would expend their leaf UTXO alongside the ephemeral anchors that lie along the path from their leaf to package a transaction with an adequate fee rate, ensuring a prompt exit. For incoming users, a protocol like Timeout Trees might include a dual UTXO commitment in the user's leaf. One UTXO would serve the user's balance while the other specifically caters to fee payment when required, without compromising scalability.

Moreover, these protocol proposals aim to empower users who may never have enough funds to afford the full on-chain exit costs, enabling them to use Bitcoin with minimized trust. To support such users, the implementation of fee insurance is suggested. Fee insurance would cover claims for pulling specific exit series onto the blockchain through any discussed mechanism. This approach is efficient as it allows multiple users to exit the protocol by utilizing just one fee-paying UTXO, effectively scaling Bitcoin as it requires only a single UTXO to facilitate exits for log_r(n)*(r-1) users.