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Offchain Contract Data for CSV Protocols

Alice and Bob want to put a token in an offchain contract that expresses:

  • Alice can take the token if she reveals the sha3 preimage of a hash within a week
  • Otherwise, Bob can take the token

The problem is that Alice does not want to use any onchain data to reveal the preimage. This is possible with the following setup upfront:

  • Alice creates a random key K and encrypts her preimage with that key
  • In the contract she commits to the resulting ciphertext and also to K
  • She sends the contract and the ciphertext to Bob
  • Bob creates an adaptor signature for Alice to spend the token, such that she reveals the secret key of K by completing the signature. Bob can detect that signature onchain.
  • If the decrypted preimage was incorrect, then Alice simply burned her UTXO and cannot prove a valid transition. In contrast, Bob can prove that the preimage was incorrect an receive the token to his fallback UTXO.

See also

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