I think I largely addressed this in the scaling section as its the same rationale used by fake L2's and covenants proponents today. If there's something you'd like addressed specifically let me know.

To reword and expand at a high level, the paper is flawed on it's premise because it makes the incorrect assumption that scaling limitations are a function of blockspace/throughput, and that if they are, that chain representation is the solution. It's self-contradicting and paradoxical.

The first reason that's flawed is that actual scaling limitation is that of ownership and distribution, there will never be more than 2.1 quadrillion sats, much of those sats already consolidated with institutions and whole coiners. Consolidation is also increasing, not decreasing, and will continue to over time as real-world wealth moves in at scale. As it does so, fees are at now at record lows, with recent changes to make them sub-sat per vbyte.

If sub-sat is not low enough, then only 0 will do. If you're dependent on 0, you're dependent on someone other than the fee market, and you cannot get the security of the chain because you are unable to unilaterally interact with the chain whether that's leaving a covenant or entering one.

Therefore, there is no script that can run on the chain that scales trustless-ness to people you claim cannot otherwise access the chain to enforce or escape it.

The next fallacy is one of throughput or efficiency, perhaps these users are not dependent on the chain but can only afford to use it in a worst-case scenario. Lightning already does this, you only need to interact with the chain on entrance and exit, no different than a covenant. Coordinated batching is where covenants can gain efficiency, but Lightning also has coordinated batching that reduces costs 80% yet no one uses it- because again cost at sub-sat fees is not the bottleneck.

To make the efficiency argument over lightning, you then have to make the assumption that users will never exit, while at the same time bemoaning lightning channel closures.

Another apple and oranges invocation regarding efficiency relative to Lightning is that there is no inbound cost to covenants, as you can receive a sunk-cost coins already in the covenant. This completely ignores that each covenant/coordinator is a closed network that still relies on Lightning or the underlying chain, open networks, to interoperate with each other, making cost and or trust inevitable.

The end result being, covenants or no covenants, trust and central coordination is inevitable. With that being the case, covenants offer nothing that can't be done already as trust and centrality are already pervasive.

But it's worse than capitulation to trust, what they actually scale is centralization to make the closed networks functional, as opposed to distributing that trust across an open network. There are ~200M businesses on the globe and less than a billion households with internet, a Lightning appliance in each could already be on-boarded today in little more than a year with existing batching capabilities and throughput, yet we don't even need close to that number.

The golden billion we refer to in fiat terms is more realistically like the orange 200 million.

Lightning for better or worse, what people like and dislike, is scaling that lives in reality.

Covenants scaloors live in effete intellectualism.