Definition
A Contract Execution Transaction (CET) is one of a set of pre-signed Bitcoin transactions created when two parties open a Discreet Log Contract (DLC). Each CET spends from the contract's shared funding transaction and encodes the exact payout split for one possible outcome of the event being wagered on. Before any funds are committed, both parties build every CET that could be needed and exchange encrypted signatures for all of them.
How CETs settle a contract
The signature each party gives the other on a CET is not a normal signature but an adaptor signature: an encrypted, half-finished signature that can only be completed using a secret the oracle will later publish. When the event resolves, the oracle releases an attestation that decrypts the signature on exactly one CET, the one matching the real-world result. Either party can then broadcast that single transaction to claim their payout. Every other CET remains unspendable because its decryption secret is never revealed.
Why the design matters
Because all the contract logic lives in these off-chain pre-signed transactions, the Bitcoin blockchain only ever sees an ordinary-looking spend. The oracle never touches the funds, never learns the contract terms, and only signs a generic statement about the outcome. A separate, time-locked refund transaction returns both parties' collateral if the oracle vanishes or fails to attest. This structure lets Bitcoin enforce conditional payouts without smart-contract scripting and without trusting a counterparty to pay.
CETs are the settlement engine behind oracle attestation and the broader DLC model. For the data-publishing side of the same system, see oracle announcement.
In Simple Terms
A Contract Execution Transaction (CET) is one of a set of pre-signed Bitcoin transactions created when two parties open a Discreet Log Contract (DLC). Each…