CheckTemplateVerify(1) is a proposed covenant opcode that commits to the transaction that can spend an output. Namely, # of inputs, # of outputs, outputs hash, etc. In practice, in many if not most CTV use-cases intended to allow multiple parties to share a single UTXO, it is difficult to impossible to allow for sufficient CTV variants to cover all possible fee-rates. It is expected that CTV would be usually used with anchor outputs to pay fees; by creating an input of the correct size in a separate transaction and including it in the CTV-committed transaction; or possibly, via a transaction sponsor soft-fork.
This poses a scalability problem: to be genuinely self-sovereign in a protocol with reactive security, such as Lightning, you must be able to get transactions mined within certain deadlines. To do that, you must pay fees. All of the intended exogenous fee-payment mechanisms for CTV require users to have at least one UTXO of suitable size to pay for those fees. This requirement for all users to have a UTXO to pay fees negates the efficiency of CTV-using UTXO sharing schemes, as in an effort to share a UTXO, CTV requires each user to have an extra UTXO. The only realistic alternative is to use a third party to pay for the UTXO, eg via a LN payment, but at that point it would be more efficient to pay an out-of-band mining fee. That of course is highly undesirable from a mining centralization perspective.(2) Recommendations: CTV in its current form be abandoned as design foot-gun. Other convenant schemes should be designed to work well with replace-by-fee, to avoid requirements for extra UTXOs, and to maximize on-chain efficiency. 1) https://github.com/bitcoin/bips/blob/deae64bfd31f6938253c05392aa355bf6d7e7605/bip-0119.mediawiki 2) https://petertodd.org/2023/v3-transactions-review#anchor-outputs-are-a-danger-to-mining-decentralization -- https://petertodd.org 'peter'[:-1]@petertodd.org
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