This proposal is inspired by advancements in ECDSA adaptor signatures and aims for compatibility with implementations like those by BlockstreamResearch. It introduces a method for creating 64-byte zero-knowledge proofs, enabling provers to demonstrate the relationship between elliptic curve points and a scalar without compromising sensitive information. Such proofs are essential in applications like Elliptic Curve Diffie-Hellman (ECDH), where it's necessary to prove that the same secret key is used for generating public keys and their shared secret, thereby maintaining secrecy.

The impetus behind this BIP is primarily to enhance the security and reliability of silent payments in Partially Signed Bitcoin Transactions (PSBTs). It seeks to fulfill the requirements of BIP352, which demands that senders compute output scripts using ECDH shared secrets derived from the same secret keys employed for signing inputs. The rationale is to mitigate the risk of fund loss due to incorrectly generated output scripts, which could still be technically valid but potentially lead to lost funds when broadcasted. By facilitating the generation of DLEQ proofs for these ECDH shared secrets, the proposal allows signatories to verify the correctness of their output scripts to others without revealing their private keys.

The BIP details the algorithms for both generating and verifying DLEQ proofs. The generation process requires a secret key, its corresponding public key, and auxiliary random data to produce a verifiable proof. Verification is achieved by using the public keys, the multiplication result of these keys, and the proof itself. A successful verification confirms the validity of the proof and the accurate computation of the shared secret, highlighting the BIP's contribution to enhancing cryptographic operations' security and verifiability within the Bitcoin ecosystem. This initiative marks a significant advancement in blockchain technology, emphasizing the importance of secure and verifiable cryptographic practices.