The text below is a direct excerpt from Marty’s Bent issue 1167: “Detailed CoinPool Design Emerges.” Sign up for the newsletter here.
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In June 2020, we made you aware of a CoinPool design published by Antoine Riard and Gleb Naumenko that provided a high-level overview of how they thought a CoinPool should be implemented. Fast forward nearly two years and the duo have released a white paper that details how their CoinPool protocol would be implemented if possible today.
As a reminder, a CoinPool implementation would allow many users to have partial ownership over a single UTXO, which would be an incredible boon for scalability. Even better, users could make instant off-chain transfers of this partial ownership. Eliminates the need to modify the individual CoinPool ledger with an on-chain transaction. If possible, CoinPools would allow billions of people to claim ownership of bitcoin on-chain as a slice of UTXO, which would massively spread ownership of bitcoin at the base layer over time.
What makes a CoinPool possible? In the current form of the design, CoinPools leverages nested Merkle trees in taproot addresses, constantly updated partially signed bitcoin transactions, and a few OP codes: SIGHASH_GROUP, SIGHASH_ANYPREVOUT, and OP_MERKLESUB. The combination of the above variables would allow for a covenant structure that makes CoinPools possible. Most importantly, the ability to transfer partial UTXO ownership off-chain.
This would not only be amazing for scalability and distribution of ownership at the base layer, it would also bring better privacy to Bitcoin users.
However, it should be noted that a lot needs to happen for the implementation of CoinPool Antoine and Gleb to even be possible. Mainly, a soft fork, or multiple soft forks, to enable some of the OP codes that make it possible. This will definitely take time as many are still mentally recovering from the Taproot softfork that was activated last year. There is a lot of discussion, proposals, reviews, debates and more discussions needed to ensure that the desired OP codes are absolutely necessary for the network.
That said, your Uncle Marty is eagerly waiting for the discussion to escalate, as increased scalability and privacy while preserving the decentralization of the distributed network is always something to strive for.