Partial Signed Bitcoin Transaction (PSBT)

PSBT is derived from BIP-174 and is used to facilitate the transmission of unsigned transactions. This standard enables multiple parties to sign the same transaction more easily. PSBT defines a precise format for conveying Bitcoin transactions. This format can carry metadata for a transaction, making it easier for signers to sign and verify the transaction. The standard also defines the process for signature merging and transaction finalization, allowing multiple parties to sign the same transaction in parallel and then merge the corresponding PSBTs to form a fully signed transaction.

Here's how PSBT works in the context of a scenario involving Alice and Bob jointly owning a UTXO locked in a 2-of-2 multi-signature address and wishing to redistribute it:

• As the transaction initiator, Alice creates a PSBT and constructs Inputs and Outputs.

• Alice carefully checks the Outputs to ensure that no one can use her Inputs to construct Outputs different from her expectations, then signs the PSBT.

• Alice sends the PSBT to Bob, who also verifies the transaction to ensure that the expected Outputs are correctly constructed in the PSBT.

• After confirming everything is correct, Bob adds his signature. With both signatures in place, the 2-of-2 signing is completed, and the transaction can be broadcast to the network.

In Shell Finance, PSBT constructs multi-party transactions in scenarios such as borrowing, redemption, and repayment by liquidators. This technology allows users to achieve atomic asset swaps conveniently.