What is CatVM, anyway?

Yesterday, the Taproot Wizards released a cartoon titled CatVM, which can be found here. This cartoon contains technical insights on scaling proposals in the Bitcoin ecosystem, amidst childish storytelling and exaggerations. The main goal of the cartoon is to introduce a new mechanism for transitioning between scaling layers on top of Bitcoin. This proposal involves two main components: Rijndael’s first OP_CAT experiment, which involves constructing a vault with a timelock mechanism, and the ability to verify merkle tree branches using OP_CAT.

With these building blocks, a unilateral withdrawal mechanism can be implemented for a shared UTXO group. Users can withdraw their funds by providing the correct merkle branch and authorization proof, with the transaction serving as a staging point with a timelock. Additionally, these building blocks allow for the enforcement of locking conditions supported by a second layer in the withdrawal process.

However, there is a missing piece in the design – the ability to update a merkle tree root representing user balances off-chain in a trustless manner. This requires a new opcode like OP_ZKVERIFY to efficiently verify authorized changes to the merkle tree off-chain. Without this opcode, a multisig solution where all participants must sign off on any root changes can be used as an alternative.

In conclusion, while the design is incomplete in terms of construction, it provides a core mechanism for locking funds into a Layer 2 and enabling users to withdraw their funds unilaterally. If a solution like OP_ZKVERIFY becomes available in the future, the off-chain state progression can be made trustless. The CatVM proposal shows potential for flexibility and usefulness in the Bitcoin ecosystem, beyond just creating digital artwork.

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