I like this proposal - it's simpler than ours and the stateless design is really elegant.

But it's not flexible enough for our use case. Two main concerns:

1. Doesn't support imported wallets

2. No good UX if passkey is deleted. User would have to create a new passkey/wallet, then decide how to transfer funds - consolidate all UTXOs in one transaction and lose privacy? Or transfer UTXO by UTXO and lose funds to fees?

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Discussion

There are always trade-offs... There are a lot of different designs you can do with PRFs. We decided to prioritizie simplicity in our protocol, inline with *our* use cases. We don't need to support imported wallets or deal with UTXOs in our SDK. We've also vetted the approach with design partners.