What is OP_CAT, and can it reshape the Bitcoin network?

If you’ve been following WOO X Research’s Daily Runes Observation, you might have noticed that despite market fluctuations, BTC transaction fees have remained modest, averaging 3 to 5 satoshi/byte over the past three months. This trend suggests a cooling interest within the Bitcoin ecosystem, raising concerns that recent developments like Ordinals and Runes may be just temporary fads.

For Bitcoin purists who believe Bitcoin should stay unchanged, this may strengthen their belief in Bitcoin’s role as a secure store of value and peer-to-peer payment system. However, others in the community argue that Bitcoin is still evolving, with ample room for improvements and innovations.

A notable development is the launch of the Covenant Attested Token (CAT) Protocol, which caused Fractal Bitcoin network transaction fees to surge to over 4,500 satoshi/byte on September 13.

The CAT protocol is a new UTXO-based token protocol enforced by Bitcoin Script at Layer 1. It offers features such as no need for indexers, modularity, programmable minting, cross-chain interoperability, and SPV compatibility.

Similar to Runes and Ordinals, the CAT protocol seeks to enhance the Bitcoin ecosystem by supporting both fungible tokens (CAT20 standard) and non-fungible tokens (CAT721 standard, yet to be released).

However, unlike Runes and Ordinals, the CAT protocol is not yet implemented on the Bitcoin mainnet. It requires an activation of a specific opcode, OP_CAT, which was removed by Bitcoin’s creator, Satoshi Nakamoto, in 2010. 

What is OP_CAT?

OP_CAT was part of Bitcoin's scripting system operation codes (OpCodes). Its name, "CAT," stands for concatenate, describing its function to join two data elements from the stack and push the result back onto the stack. This opcode enabled developers to customize transaction processing within Bitcoin, potentially facilitating more complex transaction types like covenants and Layer 2 solutions.

However, OP_CAT could be misused in combination with another opcode, OP_DUP, to create excessively large stack elements. This misuse risked Denial of Service (DoS) attacks and overwhelming network resources. To prevent such abuses and maintain Bitcoin's security by keeping its system non-Turing complete, Satoshi Nakamoto removed OP_CAT from active opcodes in 2010, as part of a broader effort to simplify and secure the network.

Shall we bring the “CAT” back?

The reintroduction of OP_CAT to the Bitcoin network has become a key focus for developers looking to enhance Bitcoin’s functionality, similar to features in Ethereum.

In October 2023, Ethan Heilman of BastionZero and Armin Sabouri from Botanix Labs proposed a revised OP_CAT opcode. Their proposal seeks to reintroduce OP_CAT through a soft fork to improve Bitcoin script capabilities, especially for complex contracts in Tapscript.

Interest in Ordinals and Runes has intensified discussions about OP_CAT. On April 20, 2024, Taproot Wizards co-founders Eric Wall and Udi Wertheimer launched a campaign to advance their OP_CAT proposal, advocating for its recognition as BIP-420.

This campaign led to the proposal being officially designated as BIP-347 on April 24, 2024. 

Pros of OP_CAT

Enhanced Smart Contract Capabilities: OP_CAT could expand Bitcoin's Tapscript functionalities, similar to Ethereum's smart contracts, adding versatility for developers and users.

Improved Security Features: OP_CAT might enable secure mechanisms, like "vaults," to protect funds. For example, it could create a "safe address" to return assets if a user’s keys are compromised.

Dynamic Allowlists and Covenants: OP_CAT could facilitate allowlists for wallets and restrictive scripts, enhancing transaction security and compliance.

Asset and Fund Bridging: It may enable Bitcoin to bridge assets across blockchains, improving interaction with other chains and supporting a wider range of decentralized apps.

Non-Equivocation Contracts: OP_CAT could support robust protocols like the Lightning Network, enhancing transaction security.

Cons of OP_CAT

Increased Complexity and Security Risks: The added scripting power could lead to vulnerabilities and exploits, complicating the network.

Impact on Bitcoin’s Simplicity: Complex scripts might bloat the system and degrade performance, contrary to Bitcoin’s design for simplicity and efficiency.

Community Division: Changes from OP_CAT could spark internal debates and disagreements within the Bitcoin community.

Potential for Network Strain: Complex scripts might slow transactions and increase costs, conflicting with Bitcoin’s goal of being efficient.

Closing thoughts

The debate on reactivating OP_CAT remains polarized.

Sabouri sees OP_CAT as a toolbox for building trust-minimized off-chain protocols.

Sztorc, the author of BIP 300, supports OP_CAT’s safety based on its historical use and current application in Bitcoin Cash.

Conversely, Linus criticizes OP_CAT’s efficiency for covenants, highlighting concerns over block space and fees.

Despite differing opinions, ongoing discussions and testing are crucial to ensure any changes align with Bitcoin’s security and vision. 

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