Key takeaways
- Lightning Labs introduces LayerTree, a non-custodial design that lets many users share one Bitcoin UTXO through covenants.
- Olaoluwa Osuntokun says LayerTree's transaction introspection permits batched exit in a single transaction without any pre-signing.
- LayerTree does not run on Bitcoin today because its opcodes, including OP_CHECKSIGFROMSTACK, are proposals, not consensus rules.
Olaoluwa Osuntokun, CTO and co-founder of Lightning Labs, said in LayerTree a single UTXO can hold the balance of millions of users as an off-chain Merkle-sum tree. Osuntokun said LayerTree's transaction introspection techniques permit batched exit from the system in a single transaction without any pre-signing.
Lightning Labs introduced LayerTree as a non-custodial scaling solution on bitcoin that connects to Lightning, in which covenants let one UTXO be shared by many users and any user can leave at any time in a single transaction. None of LayerTree runs on Bitcoin today, because its scripts use proposed opcodes that Bitcoin has not activated.
How LayerTree Works
LayerTree lets many people share one Bitcoin output. It records who owns what off-chain in a Merkle-sum tree and uses covenants to enforce every state transition, so each spend of the output must satisfy a covenant.
Any LayerTree member can leave in one transaction, at any time, with no timelock, no transactions signed in advance and no expiry date. Lightning Labs said LayerTree users don't need to be online to receive and that funds never time out. The LayerTree site puts the custody point plainly:
"The operator who runs the tree cannot take anyone's money or stop anyone leaving."
Waiting on Covenants
LayerTree is a design with a reference implementation, and its opcodes are proposals, not consensus rules. The LayerTree repository's consensus dependencies list names the Great Script Restoration (BIP-0441), OP_TX and OP_CHECKSIGFROMSTACK (BIP-0348) among other drafts for introspection. The same list includes the "New Opcodes for Tapscript v2" drafts and elliptic curve (EC) opcodes, none of which are consensus rules on Bitcoin today.
LayerTree proposes no opcodes of its own and composes the existing candidates. That makes LayerTree, a non-custodial Bitcoin scaling design from Lightning Labs, yet another scaling solution that could become workable if covenants are implemented on Bitcoin.
Why It Matters
Lightning Labs is pitching LayerTree as a way for many users to share one UTXO without a custodian, since the operator who runs the tree cannot take anyone's money or stop anyone leaving. We think that is the right incentive design, because self-custody that scales leaves fewer people parking sats with custodians that can freeze, surveil or lose them. Yet none of LayerTree runs on Bitcoin today, and it is yet another scaling design that could become workable only if covenants are implemented on Bitcoin. Until then, custodial shortcuts keep their market, and every user who trades keys for convenience pays for it in sovereignty.
