What use cases do Kaspa covenants enable?

Kaspa covenants unlock five broad categories of on-chain capability by letting scripts enforce rules on how UTXOs can be spent. According to KIP-0017, those categories are: fungible and non-fungible tokens (rules enforced through covenant-constrained UTXOs), Smart Vaults (timelocks, multisig, and other security constraints), congestion control (rate limiting and priority rules), L1-L2 trustless bridges (combining KIP-16's ZK proof verification with covenant scripts for cross-chain asset movement), and stateful applications (encoding application state in UTXOs and enforcing valid transitions). For a beginner, this matters because covenants are what transform Kaspa from a pure payment network into a platform where programmable financial logic runs directly at the protocol level.

Not financial advice. This content is for education only. Nothing here is financial advice.