<style> .reveal { font-size: 28px; background-color: #ffffff; color: #000000; width: 1792px; height: 1024px; } .reveal h1, .reveal h2, .reveal h3, .reveal h4, .reveal h5, .reveal h6 { color: #000000; } section { text-align: left; } </style> # Will there be a Consensus Upgrade of Bitcoin in 2025? Jeffrey Hu, HashKey Capital April 2025 --- ## About Us - Global in influence and crypto-native, HashKey Capital is a digital asset and blockchain leader helping institutions, founders and talents advance the blockchain industries. - HashKey Capital, one of the largest crypto funds and the earliest institutional investor in blockchains, has managed over US$1 billion in client assets since its inception, with over 500 investments in infrastructure, tools, and applications since 2015. - With our deep knowledge across the blockchain ecosystem, HashKey Capital has built a robust network connecting founders, investors, developers, and regulators. --- ## About Me - Head of Investment Research @ HashKey Capital - Contributor of Bitcoin Optech newsletter --- ## Topics - Overview of the potential upgrade features - Review of the upgrade process - Some predictions of the upgrade affects Bitcoin & "Bitcoin ecosystem" --- ## Does Bitcoin also upgrade? Yes! Segwit, Taproot... Bitcoin's new features after upgrade: - LN - native "account abstraction" --- ## How Bitcoin will upgrade? Not decided by - roadmap - "core dev" calls - ... --- ## What kind of "upgrade" are you talking about? Bitcoin is quite different when we say "upgrade": - consensus upgrade: soft forks - no consensus upgrade: updated in many releases in many clients --- ## Upgrade without consensus upgrade Node's own behaviours - Mempool policy: RBF, package relay, v3 txs - Broadcast: Erlay - UTXO-related: Utreexo, AssumeUTXO, Dust limits - New apps: Silent Payments --- ## But what's Consensus Upgrade Consensus rules are those all nodes have to follow. To verify whether blocks/txs are valid. --- ## What will the upgrade be? - tech debt: Consensus cleanup - new features: covenants - other new features: quantum-resistance --- ## 1. Consensus Cleanup - Some technical debts: - Time Warp Attack - Duplicated Coinbase txs - But people are very cautious so as not to confiscate any existing UTXOs. --- ## 2. Covenants Covenant is a mechanism that can set conditions on future Bitcoin transactions. But this can bring more programmability on Bitcoin hence bring more application scenarios. _See more in our research report: "[Covenants: Programmability of Bitcoin](https://medium.com/hashkey-capital-insights/covenants-programmability-of-bitcoin-0e646510b197)"_ --- ## What are the options [a survey of covenants support](https://en.bitcoin.it/wiki/Covenants_support)  --- ## Covenants: OP_CTV - CTV operates by matching transaction data to predefined hashes; only if the transaction’s hash matches one of these predetermined values, or if block height exceeds a certain threshold, can the UTXO be spent - Apps: Vault, Congestion Control, Babylon staking, etc. - Updates: - attempted speedy trail in 2022 - BIP-119 - Submitted [PR](https://x.com/jamesob/status/1897001664080642136) in Bitcoin Core - Limited covenants. Can be combined with CSFS, TXHASH --- ## Covenants: OP_CSFS - CheckSigFromStack, check any signatures for data from stack, not only for the tx hash. - Enable more flexible contracts - Apps: Eltoo, DLC - More acceptable for CTV + CSFS - Step by step: - CTV + CSFS -> OP_CAT -> LNHANCE/GSR - CTV + CSFS -> GSR + OP_CAT -> TXHASH --- ## Covenants: OP_CAT - concatenate 2 items on the stack - Disabled since 2010, but don't have the vulnerability in Taproot - Apps: BTCFi, merkle tree verification, zkSTARK - Concerns: too flexible for covenants --- ## Combination: LNHANCE - Combinations: CTV, CSFS, OP_INTERNALKEY, OP_PAIRCOMMIT - LN Enhance, to enhance L2 and covenants - Eltoo - Ark - More cost-effective, but more complex for test & auditing before activation --- ## Combination: Great Script Restoration - even bigger than LNHANCE, include: OP_CAT, OP_XOR, OP_AND, OP_OR, OP_MUL, etc. - Many concerns about that this is too aggressive --- ## 3. Other proposals Quantum-resistance: - P2QRH (BIP-360) - P2TRH --- ## Soft Fork But how we can upgrade? Soft fork - can happen even today! By simply fork the repo - But the problem is how many people will acknowledge that new type of txs - So we need discussions and get the "consensus before consensus" --- ## How to build the social consensus 1. Finalized BIP Status 2. Client Implementation Readiness 3. Significant Community Support 4. Activation Plan and Coordination > we believe in rough consensus and running code --- ## Activation - MASF: Miner Activated Soft Fork - UASF: User Activated Soft Fork - Speedy Trial - multi-stage (“modern”) soft fork activation - flag days --- ## What these will bring to Bitcoin? Can construct more reliable components on Bitcoin. More activities could move to L1. - Staking: - Babylon, more secure - Lending: - DLC, more decentralized - stable coin (Taproot Assets) --- ## Off-chain More secure L2 protocols - LN, Eltoo - Ark - BitVM2 bridges, zkVM --- ## So, will it happen in 2025? We can keep close eyes on: - OP_NEXT, Apr 11-12 - Bitcoin Core's PR review - Discussions about activation --- # Thanks! @jeffrey_hu