Delivery versus payment

The settlement problem in one line: neither side should be able to take delivery without paying, or pay without taking delivery. Traditional finance solves it with a clearing house. A covenant solves it with atomicity.

  Leg A: payment                Leg B: delivery
        │                             │
        └────── one shared secret ────┘
                       │
        claiming either leg reveals it —
        the other leg becomes claimable
                       │
        both settle, or both refund

How it works

Both legs are locked under scripts keyed to the same hash. Claiming one leg requires revealing the preimage — which is exactly what the counterparty needs to claim the other. Timeouts (CSV) guarantee that an abandoned trade refunds both sides.

The legs don't need to live on the same chain: one can be a native Bitcoin transaction, proven by SPV or settled as a cross-chain atomic swap. That is how the flagship BTC↔BTC settlement works — DvP where both deliverables are bitcoin.

Why here

Atomic settlement needs programmability (Bitcoin refuses it) plus Bitcoin-fact verification (nobody else has it without an oracle). The combination is the niche.

Primitives: hashlocks (HTLC) · CSV · TX_CONFIRMED · atomic swaps