The process begins with the generation of two critical components: $C_F$, representing functional encryption, and $C_p$, pertaining to the covenant process. These elements are produced by the owner of the key pairs $(m,M)$ and $(p,P)$. Following their creation, the private keys $m$ and $p$ are securely erased, ensuring that the transaction process relies solely on the remaining public components.

The mechanism allows for the calculation of a covenant output destination public key through a specific operation involving the public key $P$ and a hash of the transaction details. This operation facilitates the creation of a destination that can be publicly derived but requires a specific signature process for any transactional changes. The signing process utilizes the functional encryption component $C_F$ in combination with the covenant process $C_p$, through the encryption of the message $M$ with the transaction details. This approach ensures that while the creation of a signature for any given transaction is possible, it adheres to strict conditions defined by the initial setup.

This method introduces a flexible yet secure framework for conducting transactions. It eliminates the need for statically predefined signatures, allowing for a dynamic and repeatable process. The implication is a system where additional constraints and conditions can be applied to transactions post-creation, similar to existing practices within Script for locking mechanisms. This flexibility does not compromise security or specificity, as the ability to sign over transactions remains tightly controlled through the innovative use of functional encryption and covenant processes.