BIP 0112

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  BIP: 112
  Title: CHECKSEQUENCEVERIFY
  Authors: BtcDrak <btcdrak@gmail.com>
           Mark Friedenbach <mark@friedenbach.org>
           Eric Lombrozo <elombrozo@gmail.com>
  Status: Draft
  Type: Standards Track
  Created: 2015-08-10

Abstract

This BIP describes a new opcode (CHECKSEQUENCEVERIFY) for the Bitcoin scripting system that in combination with BIP 68 allows execution pathways of a script to be restricted based on the age of the output being spent.


Summary

CHECKSEQUENCEVERIFY redefines the existing NOP3 opcode. When executed, the script interpreter continues as if a NOP was executed so long as one of the following conditions is met:

 * the transaction's nVersion field is 0 or 1;
 * the top item on the stack is a value greater than or equal to (1 << 31); or
 * the top item on the stack and the transaction input's sequence number are both relative lock-times of the same units, and the relative lock-time represented by the sequence number is greater than or equal to the relative lock-time represented by the top item on the stack.

Otherwise, script execution terminates with an error.

BIP 68's redefinition of nSequence prevents a non-final transaction from being selected for inclusion in a block until the corresponding input has reached the specified age, as measured in block height or block time. By comparing the argument to CHECKSEQUENCEVERIFY against the nSequence field, we indirectly verify a desired minimum age of the the output being spent; until that relative age has been reached any script execution pathway including the CHECKSEQUENCEVERIFY will fail to validate, causing the transaction not to be selected for inclusion in a block.


Motivation

BIP 68 repurposes the transaction nSequence field meaning by giving sequence numbers new consensus-enforced semantics as a relative lock-time. However, there is no way to build Bitcoin scripts to make decisions based on this field.

By making the nSequence field accessible to script, it becomes possible to construct code pathways that only become accessible some minimum time after proof-of-publication. This enables a wide variety of applications in phased protocols such as escrow, payment channels, or bidirectional pegs.


Contracts With Expiration Deadlines

Escrow with Timeout

An escrow that times out automatically 30 days after being funded can be established in the following way. Alice, Bob and Escrow create a 2-of-3 address with the following redeemscript.

   IF
       2 <Alice's pubkey> <Bob's pubkey> <Escrow's pubkey> 3 CHECKMULTISIGVERIFY
   ELSE
       "30d" CHECKSEQUENCEVERIFY DROP
       <Alice's pubkey> CHECKSIGVERIFY
   ENDIF

At any time funds can be spent using signatures from any two of Alice, Bob or the Escrow.

After 30 days Alice can sign alone.

The clock does not start ticking until the payment to the escrow address confirms.


Retroactive Invalidation

In many instances, we would like to create contracts that can be revoked in case of some future event. However, given the immutable nature of the blockchain, it is practically impossible to retroactively invalidate a previous commitment that has already confirmed. The only mechanism we really have for retroactive invalidation is blockchain reorganization which, for fundamental security reasons, is designed to be very hard and very expensive to deliberately pull off.

Despite this limitation, we do have a way to provide something functionally similar using CHECKSEQUENCEVERIFY. By constructing scripts with multiple branches of execution where one or more of the branches are delayed we provide a time window in which someone can supply an invalidation condition that allows the output to be spent, effectively invalidating the would-be delayed branch and potentially discouraging another party from broadcasting the transaction in the first place. If the invalidation condition does not occur before the timeout, the delayed branch becomes spendable, honoring the original contract.

Some more specific applications of this idea:

Hash Time-Locked Contracts

Hash Time-Locked Contracts (HTLCs) provide a general mechanism for offchain contract negotiation. An execution pathway can be made to require knowledge of a secret (a hash preimage) that can be presented within an invalidation time window. By sharing the secret it is possible to guarantee to the counterparty that the transaction will never be broadcast since this would allow the counterparty to claim the output immediately while one would have to wait for the time window to pass. If the secret has not been shared, the counterparty will be unable to use the instant pathway and the delayed pathway must be used instead.

Bidirectional Payment Channels

Scriptable relative locktime provides a predictable amount of time to respond in the event a counterparty broadcasts a revoked transaction: Absolute locktime necessitates closing the channel and reopen it when getting close to the timeout, whereas with relative locktime, the clock starts ticking the moment the transactions confirms in a block. It also provides a means to know exactly how long to wait (in number of blocks) before funds can be pulled out of the channel in the event of a noncooperative counterparty.


Lightning Network

The lightning network extends the bidirectional payment channel idea to allow for payments to be routed over multiple bidirectional payment channel hops.

These channels are based on an anchor transaction that requires a 2-of-2 multisig from Alice and Bob, and a series of revocable commitment transactions that spend the anchor transaction. The commitment transaction splits the funds from the anchor between Alice and Bob and the latest commitment transaction may be published by either party at any time, finalising the channel.

Ideally then, a revoked commitment transaction would never be able to be successfully spent; and the latest commitment transaction would be able to be spent very quickly.

To allow a commitment transaction to be effectively revoked, Alice and Bob have slightly different versions of the latest commitment transaction. In Alice's version, any outputs in the commitment transaction that pay Alice also include a forced delay, and an alternative branch that allows Bob to spend the output if he knows that transaction's revocation code. In Bob's version, payments to Bob are similarly encumbered. When Alice and Bob negotiate new balances and new commitment transactions, they also reveal the old revocation code, thus committing to not relaying the old transaction.

A simple output, paying to Alice might then look like:

   HASH160 <revokehash> EQUAL
   IF
       DUP HASH160 <Bob key hash> CHECKSIGVERIFY
   ELSE
       "24h" CHECKSEQUENCEVERIFY
       DUP HASH160 <Alice key hash> CHECKSIGVERIFY
   ENDIF

This allows Alice to publish the latest commitment transaction at any time and spend the funds after 24 hours, but also ensures that if Alice relays a revoked transaction, that Bob has 24 hours to claim the funds.

With CHECKLOCKTIMEVERIFY, this would look like:

   HASH160 <revokehash> EQUAL
   IF
       DUP HASH160 <Bob key hash> CHECKSIGVERIFY
   ELSE
       "2015/12/15" CHECKLOCKTIMEVERIFY
       DUP HASH160 <Alice key hash> CHECKSIGVERIFY
   ENDIF

This form of transaction would mean that if the anchor is unspent on 2015/12/16, Alice can use this commitment even if it has been revoked, simply by spending it immediately, giving no time for Bob to claim it.

Ths means that the channel has a deadline that cannot be pushed back without hitting the blockchain; and also that funds may not be available until the deadline is hit. CHECKSEQUENCEVERIFY allows you to avoid making such a tradeoff.

Hashed Time-Lock Contracts (HTLCs) make this slightly more complicated, since in principle they may pay either Alice or Bob, depending on whether Alice discovers a secret R, or a timeout is reached, but the same principle applies -- the branch paying Alice in Alice's commitment transaction gets a delay, and the entire output can be claimed by the other party if the revocation secret is known. With CHECKSEQUENCEVERIFY, a HTLC payable to Alice might look like the following in Alice's commitment transaction:

   HASH160 DUP <revokehash> EQUAL
   IF
       DROP DUP HASH160 <Bob key hash> CHECKSIGVERIFY
   ELSE
       <R hash> EQUAL
       IF
           "24h" CHECKSEQUENCEVERIFY DROP
           DUP HASH160 <Alice key hash> CHECKSIGVERIFY
       ELSE
           "2015/10/20 10:33" CHECKLOCKTIMEVERIFY DROP
           DUP HASH160 <Bob key hash> CHECKSIGVERIFY
       ENDIF
   ENDIF

and correspondingly in Bob's commitment transaction:

  HASH160 DUP <revokehash> EQUAL
  IF
      DROP DUP HASH160 <Alice key hash> CHECKSIGVERIFY
  ELSE
      <R hash> EQUAL
      IF
          DUP HASH160 <Alice key hash> CHECKSIGVERIFY
      ELSE
          "24h" CHECKSEQUENCEVERIFY DROP
          "2015/10/20 10:33" CHECKLOCKTIMEVERIFY DROP
          DUP HASH160 <Bob key hash> CHECKSIGVERIFY
      ENDIF
  ENDIF

Note that both CHECKSEQUENCEVERIFY and CHECKLOCKTIMEVERIFY are used in the final branch of above to ensure Bob cannot spend the output until after both the timeout is complete and Alice has had time to reveal the revocation secret.

See the Deployable Lightning paper.


2-Way Pegged Sidechains

The 2-way pegged sidechain requires a new REORGPROOFVERIFY opcode, the semantics of which are outside the scope of this BIP. CHECKSEQUENCEVERIFY is used to make sure that sufficient time has passed since the return peg was posted to publish a reorg proof:

   IF
       lockTxHeight <lockTxHash> nlocktxOut [<workAmount>] reorgBounty Hash160(<...>) <genesisHash> REORGPROOFVERIFY
   ELSE
       withdrawLockTime CHECKSEQUENCEVERIFY DROP HASH160 p2shWithdrawDest EQUAL
   ENDIF


Specification

Refer to the reference implementation, reproduced below, for the precise semantics and detailed rationale for those semantics.


   /* Threshold for nSequence: below this value it is interpreted
    * as a relative lock-time, otherwise ignored. */
   static const uint32_t SEQUENCE_LOCKTIME_THRESHOLD = (1 << 31);
   
   /* Threshold for nSequence when interpreted as a relative
    * lock-time: below this value it has units of blocks, otherwise
    * seconds. */
   static const uint32_t SEQUENCE_UNITS_THRESHOLD = (1 << 30);
   
   case OP_NOP3:
   {
       if (!(flags & SCRIPT_VERIFY_CHECKSEQUENCEVERIFY)) {
           // not enabled; treat as a NOP3
           if (flags & SCRIPT_VERIFY_DISCOURAGE_UPGRADABLE_NOPS) {
               return set_error(serror, SCRIPT_ERR_DISCOURAGE_UPGRADABLE_NOPS);
           }
           break;
       }
       
       if (stack.size() < 1)
           return set_error(serror, SCRIPT_ERR_INVALID_STACK_OPERATION);
       
       // Note that elsewhere numeric opcodes are limited to
       // operands in the range -2**31+1 to 2**31-1, however it is
       // legal for opcodes to produce results exceeding that
       // range. This limitation is implemented by CScriptNum's
       // default 4-byte limit.
       //
       // Thus as a special case we tell CScriptNum to accept up
       // to 5-byte bignums, which are good until 2**39-1, well
       // beyond the 2**32-1 limit of the nSequence field itself.
       const CScriptNum nSequence(stacktop(-1), fRequireMinimal, 5);
       
       // In the rare event that the argument may be < 0 due to
       // some arithmetic being done first, you can always use
       // 0 MAX CHECKSEQUENCEVERIFY.
       if (nSequence < 0)
           return set_error(serror, SCRIPT_ERR_NEGATIVE_LOCKTIME);
       
       // To provide for future soft-fork extensibility, if the
       // operand is too large to be treated as a relative lock-
       // time, CHECKSEQUENCEVERIFY behaves as a NOP.
       if (nSequence >= SEQUENCE_LOCKTIME_THRESHOLD)
           break;
       
       // Actually compare the specified sequence number with the input.
       if (!checker.CheckSequence(nSequence))
           return set_error(serror, SCRIPT_ERR_UNSATISFIED_LOCKTIME);
       
       break;
   }
   
   bool TransactionSignatureChecker::CheckSequence(const CScriptNum& nSequence) const
   {
       // Relative lock times are supported by comparing the passed
       // in operand to the sequence number of the input.
       const int64_t txToSequence = (int64_t)txTo->vin[nIn].nSequence;
       
       // Fail if the transaction's version number is not set high
       // enough to trigger BIP 68 rules.
       if (static_cast<uint32_t>(txTo->nVersion) < 2)
           return false;
       
       // Sequence numbers above SEQUENCE_LOCKTIME_THRESHOLD
       // are not consensus constrained. Testing that the transaction's
       // sequence number is not above this threshold prevents
       // using this property to get around a CHECKSEQUENCEVERIFY
       // check.
       if (txToSequence >= SEQUENCE_LOCKTIME_THRESHOLD)
           return false;
       
       // There are two kinds of nSequence: lock-by-blockheight
       // and lock-by-blocktime, distinguished by whether
       // nSequence < SEQUENCE_UNITS_THRESHOLD.
       //
       // We want to compare apples to apples, so fail the script
       // unless the type of nSequence being tested is the same as
       // the nSequence in the transaction.
       if (!(
           (txToSequence <  SEQUENCE_UNITS_THRESHOLD && nSequence <  SEQUENCE_UNITS_THRESHOLD) ||
           (txToSequence >= SEQUENCE_UNITS_THRESHOLD && nSequence >= SEQUENCE_UNITS_THRESHOLD)
       ))
           return false;
       
       // Now that we know we're comparing apples-to-apples, the
       // comparison is a simple numeric one.
       if (txTo->vin[nIn].nSequence > txToSequence)
           return false;
       
       return true;
   }


Reference Implementation

A reference implementation is provided by the following pull request:

https://github.com/bitcoin/bitcoin/pull/6564


Deployment

We reuse the double-threshold switchover mechanism from BIPs 34 and 66, with the same thresholds, but for nVersion = 4. The new rules are in effect for every block (at height H) with nVersion = 4 and at least 750 out of 1000 blocks preceding it (with heights H-1000..H-1) also have nVersion = 4. Furthermore, when 950 out of the 1000 blocks preceding a block do have nVersion = 4, nVersion = 3 blocks become invalid, and all further blocks enforce the new rules.

It is recommended that this soft-fork deployment trigger include other related proposals for improving Bitcoin's lock-time capabilities, including:

BIP 65: OP_CHECKLOCKTIMEVERIFY,

BIP 68: Consensus-enforced transaction replacement signalled via sequence numbers,

and BIP 113: Median-Past-Time-Lock.

Credits

Mark Friedenbach invented the application of sequence numbers to achieve relative lock-time, and wrote the reference implementation of CHECKSEQUENCEVERIFY.

The reference implementation and this BIP was based heavily on work done by Peter Todd for the closely related BIP 65.

BtcDrak authored this BIP document.

Thanks to Eric Lombrozo and Anthony Towns for contributing example usecases.


References

BIP 68 Consensus-enforced transaction replacement signalled via sequence numbers

BIP 65 OP_CHECKLOCKTIMEVERIFY

BIP 113 Median past block time for time-lock constraints

HTLCs using OP_CHECKSEQUENCEVERIFY/OP_LOCKTIMEVERIFY and revocation hashes

Lightning Network

Deployable Lightning

Scaling Bitcoin to Billions of Transactions Per Day

Softfork deployment considerations

Version bits

Jeremy Spilman Micropayment Channels


Copyright

This document is placed in the public domain.