Bitcoin Covenants Part 5: MATT and OP_CHECKCONTRACTVERIFY — How Bitcoin could carry state across transactions

OP_CCV embeds contract state directly into Taproot output keys and enforces valid state transitions onchain. This makes it possible to achieve stateful contracts and compact fraud proofs.

This is Part 5 in the technical article series about Bitcoin covenants by Cointelegraph Research. To read the previous article click here. 

MATT (Merkleize All The Things) is a smart contract framework for Bitcoin that enables stateful contracts and scalable fraud proofs. A stateful contract carries information forward across multiple transactions and can update this information as the contract evolves. Standard Bitcoin scripts do not provide this capability, because each transaction is evaluated independently with no memory of previous executions.

Every covenant proposal allows state-carrying UTXOs to an extent, as illustrated by scripting languages such as Sapio, which builds on OP_CTV. This works by using addresses to represent a finite state automaton, where transactions function as the state transitions. However, there is no way to elegantly implement numerical logic in this paradigm, a gap filled by MATT, and in particular its proposed implementation through OP_CCV. Because MATT allows committed data to be computed at spend time and re-embedded into the next output, each spend can derive a new state dynamically, instead of choosing from a predetermined set of states. 

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