Asynchronous Nik

🚀 The Fractal Mainnet is LIVE! 🚀 We’re thrilled to announce that Fractal’s first block has been mined, marking the beginning of a new era for scaling Bitcoin natively. 🌐 Fractal’s genesis block carries the same message as Bitcoin's: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks," echoing our commitment to build on Bitcoin's foundation. 🧵👇 1/11

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Functional Encryption enables covenants on Bitcoin without a soft fork. You simply encrypt a covenant opcode circuit containing a particular private key, e.g., CTV. let F be your encrypted function under PK P. F takes as input a tx A, a covenant program C, and outputs signature of A under P tweaked by C (P_C) if C(A) = true. If A's input is spendable by P_C, this is a covenant opcode with a one time trusted setup.

It's important to consider PSBT atomic swaps. These would be on-chain swaps spending at least two UTXOs, one spending bitcoin, the other spending the non-monetary asset, and maybe one for fees. There's nothing miners can do to manipulate signed transactions. Including them or excluding them from a block doesn't introduce slippage when using PSBT atomic swaps, which are effectively MEV-resistant, while accounts-based chains like EVM are particularly vulnerable. With PSBTs, the state of the swap is locked and atomic. Where things get complicated is when we introduce RBF (as always)... To update prices and amounts as the market moves, such a swap protocol may introduce RBF, but then both parties must consent for the transaction to be valid again, and so there's nothing miners are doing in that case. If a market is particularly hot, they might benefit from higher RBF fees, but that's not MEV, because the mining pools generally aren't doing anything other than collecting fees from already-signed transactions. There is the possibility that a mining pool might exclude a swap transaction if they know they'll mine a block, and include their own transaction. However, this is mitigated by keeping swaps P2P and having no identifiable on-chain swap footprint, as RGB allows with its client-side validated protocol. Thus, nothing on-chain is present to signal what's being swapped, and even off-chain data can be kept confidential. If this proves superior, then the market will decide which tokens protocol is best. (RGB, of course) All this work of course goes out the window if something irresponsible like OP_CAT or BIP-300 were activated. Those changes must be opposed at all costs if MEV is to be prevented.

PSBTs are fantastic atomic swaps on Bitcoin, except they are a centralizing force on Ordinals trading. What I mean is Magic Eden, and most other PSBT marketplaces, store signed PSBTs in their own centralized database. Noone else can access the raw PSBT data. Most marketplaces do this to preserve liquidity on their own marketplaces (they aren't incentivized to share). A few (Open Ordex and Deezy place) use Nostr as an open repository of signed PSBT listings, which is fantastic. And further in the Magic Eden case, they don't make you invalidate previously signed PSBTs by sending the ordinal to yourself (the only way to cancel a signed PSBT is spend the UTXO). Meaning if someone hacked the Magic Eden PSBT database, or somehow old listings (previously signed and still valid PSBTs) were exposed, your Ordinals could be purchased at previously listed prices, which is generally undesirable. Case and point -> this is the most likely explanation for the scenario below.

To offset the security impact of the latest halving, miners need to constantly earn an extra 3.125 BTC in fees. With the effective average block size of 1.75 MB, it's 312,500,000 ÷ 1,750,000 = 179 sat per byte on top of what was before. Today's fee rate is 20 sat per byte 🤷‍♂️