diff --git a/src/bench/mempool_eviction.cpp b/src/bench/mempool_eviction.cpp
index 0ec7c158cc..6ad5b57ae4 100644
--- a/src/bench/mempool_eviction.cpp
+++ b/src/bench/mempool_eviction.cpp
@@ -16,9 +16,11 @@ static void AddTx(const CTransactionRef& tx, const CAmount& nFee, CTxMemPool& po
     bool spendsCoinbase = false;
     unsigned int sigOpCost = 4;
     LockPoints lp;
+    std::set<std::pair<uint256, COutPoint>> setPeginsSpent;
     pool.addUnchecked(tx->GetHash(), CTxMemPoolEntry(
                                          tx, nFee, nTime, nHeight,
-                                         spendsCoinbase, sigOpCost, lp));
+                                         spendsCoinbase, sigOpCost, lp,
+                                         setPeginsSpent));
 }
 
 // Right now this is only testing eviction performance in an extremely small
diff --git a/src/consensus/tx_verify.cpp b/src/consensus/tx_verify.cpp
index fb07f472a0..5bdd2cf69f 100644
--- a/src/consensus/tx_verify.cpp
+++ b/src/consensus/tx_verify.cpp
@@ -8,6 +8,7 @@
 #include <primitives/transaction.h>
 #include <script/interpreter.h>
 #include <consensus/validation.h>
+#include <validation.h>
 
 // TODO remove the following dependencies
 #include <chain.h>
@@ -158,9 +159,18 @@ int64_t GetTransactionSigOpCost(const CTransaction& tx, const CCoinsViewCache& i
 
     for (unsigned int i = 0; i < tx.vin.size(); i++)
     {
-        const Coin& coin = inputs.AccessCoin(tx.vin[i].prevout);
-        assert(!coin.IsSpent());
-        const CTxOut &prevout = coin.out;
+        if (tx.vin[i].m_is_pegin && !IsValidPeginWitness(tx.vin[i].m_pegin_witness, tx.vin[i].prevout)) {
+            continue;
+        }
+
+        CTxOut prevout;
+        if (tx.vin[i].m_is_pegin) {
+            prevout = GetPeginOutputFromWitness(tx.vin[i].m_pegin_witness);
+        } else {
+            const Coin& coin = inputs.AccessCoin(tx.vin[i].prevout);
+            assert(!coin.IsSpent());
+            prevout = coin.out;
+        }
         nSigOps += CountWitnessSigOps(tx.vin[i].scriptSig, prevout.scriptPubKey, &tx.vin[i].scriptWitness, flags);
     }
     return nSigOps;
@@ -215,7 +225,8 @@ bool CheckTransaction(const CTransaction& tx, CValidationState &state, bool fChe
     return true;
 }
 
-bool Consensus::CheckTxInputs(const CTransaction& tx, CValidationState& state, const CCoinsViewCache& inputs, int nSpendHeight, CAmount& txfee)
+namespace Consensus {
+bool CheckTxInputs(const CTransaction& tx, CValidationState& state, const CCoinsViewCache& inputs, int nSpendHeight, CAmount& txfee, std::set<std::pair<uint256, COutPoint>>& setPeginsSpent)
 {
     // are the actual inputs available?
     if (!inputs.HaveInputs(tx)) {
@@ -226,23 +237,47 @@ bool Consensus::CheckTxInputs(const CTransaction& tx, CValidationState& state, c
     CAmount nValueIn = 0;
     for (unsigned int i = 0; i < tx.vin.size(); ++i) {
         const COutPoint &prevout = tx.vin[i].prevout;
-        const Coin& coin = inputs.AccessCoin(prevout);
-        assert(!coin.IsSpent());
+        if (tx.vin[i].m_is_pegin) {
+            // Check existence and validity of pegin witness
+            if (!IsValidPeginWitness(tx.vin[i].m_pegin_witness, prevout)) {
+                return state.DoS(0, false, REJECT_PEGIN, "bad-pegin-witness");
+            }
+            std::pair<uint256, COutPoint> pegin = std::make_pair(uint256(tx.vin[i].m_pegin_witness.stack[2]), prevout);
+            if (inputs.IsPeginSpent(pegin)) {
+                return state.Invalid(false, REJECT_INVALID, "bad-txns-double-pegin", strprintf("Double-pegin of %s:%d", prevout.hash.ToString(), prevout.n));
+            }
+            if (setPeginsSpent.count(pegin)) {
+                return state.DoS(100, false, REJECT_INVALID, "bad-txns-double-pegin-in-obj", false,
+                    strprintf("Double-pegin of %s:%d in single tx/block", prevout.hash.ToString(), prevout.n));
+            }
+            setPeginsSpent.insert(pegin);
 
-        // If prev is coinbase, check that it's matured
-        if (coin.IsCoinBase() && nSpendHeight - coin.nHeight < COINBASE_MATURITY) {
-            return state.Invalid(false,
-                REJECT_INVALID, "bad-txns-premature-spend-of-coinbase",
-                strprintf("tried to spend coinbase at depth %d", nSpendHeight - coin.nHeight));
-        }
+            // Tally the input amount.
+            const CTxOut out = GetPeginOutputFromWitness(tx.vin[i].m_pegin_witness);
+            if (!MoneyRange(out.nValue)) {
+                return state.DoS(100, false, REJECT_INVALID, "bad-txns-pegin-inputvalue-outofrange");
+            }
+            nValueIn += out.nValue;
+        } else {
+            const Coin& coin = inputs.AccessCoin(prevout);
+            assert(!coin.IsSpent());
 
-        // Check for negative or overflow input values
-        nValueIn += coin.out.nValue;
-        if (!MoneyRange(coin.out.nValue) || !MoneyRange(nValueIn)) {
-            return state.DoS(100, false, REJECT_INVALID, "bad-txns-inputvalues-outofrange");
+            // If prev is coinbase, check that it's matured
+            if (coin.IsCoinBase() && nSpendHeight - coin.nHeight < COINBASE_MATURITY) {
+                return state.Invalid(false,
+                    REJECT_INVALID, "bad-txns-premature-spend-of-coinbase",
+                    strprintf("tried to spend coinbase at depth %d", nSpendHeight - coin.nHeight));
+            }
+
+            // Check for negative or overflow input values
+            nValueIn += coin.out.nValue;
+            if (!MoneyRange(coin.out.nValue) || !MoneyRange(nValueIn)) {
+                return state.DoS(100, false, REJECT_INVALID, "bad-txns-inputvalues-outofrange");
+            }
         }
     }
 
+    //TODO(rebase) you need to replace these two blocks with the `VerifyAmounts` and `HasValidFee` methods
     const CAmount value_out = tx.GetValueOut();
     if (nValueIn < value_out) {
         return state.DoS(100, false, REJECT_INVALID, "bad-txns-in-belowout", false,
@@ -258,3 +293,4 @@ bool Consensus::CheckTxInputs(const CTransaction& tx, CValidationState& state, c
     txfee = txfee_aux;
     return true;
 }
+}// namespace Consensus
diff --git a/src/consensus/tx_verify.h b/src/consensus/tx_verify.h
index 0519cef8c0..2830535fdc 100644
--- a/src/consensus/tx_verify.h
+++ b/src/consensus/tx_verify.h
@@ -7,13 +7,16 @@
 
 #include <amount.h>
 
+#include <set>
 #include <stdint.h>
 #include <vector>
+#include <uint256.h>
 
 class CBlockIndex;
 class CCoinsViewCache;
 class CTransaction;
 class CValidationState;
+class COutPoint;
 
 /** Transaction validation functions */
 
@@ -27,7 +30,7 @@ namespace Consensus {
  * @param[out] txfee Set to the transaction fee if successful.
  * Preconditions: tx.IsCoinBase() is false.
  */
-bool CheckTxInputs(const CTransaction& tx, CValidationState& state, const CCoinsViewCache& inputs, int nSpendHeight, CAmount& txfee);
+bool CheckTxInputs(const CTransaction& tx, CValidationState& state, const CCoinsViewCache& inputs, int nSpendHeight, CAmount& txfee, std::set<std::pair<uint256, COutPoint>>& setPeginsSpent);
 } // namespace Consensus
 
 /** Auxiliary functions for transaction validation (ideally should not be exposed) */
diff --git a/src/consensus/validation.h b/src/consensus/validation.h
index 008eda69b2..a894fd2566 100644
--- a/src/consensus/validation.h
+++ b/src/consensus/validation.h
@@ -21,6 +21,8 @@ static const unsigned char REJECT_NONSTANDARD = 0x40;
 // static const unsigned char REJECT_DUST = 0x41; // part of BIP 61
 static const unsigned char REJECT_INSUFFICIENTFEE = 0x42;
 static const unsigned char REJECT_CHECKPOINT = 0x43;
+// ELEMENTS:
+static const unsigned char REJECT_PEGIN = 0x44;
 
 /** Capture information about block/transaction validation */
 class CValidationState {
diff --git a/src/policy/policy.cpp b/src/policy/policy.cpp
index d37fa4fd23..2be056d755 100644
--- a/src/policy/policy.cpp
+++ b/src/policy/policy.cpp
@@ -207,7 +207,7 @@ bool IsWitnessStandard(const CTransaction& tx, const CCoinsViewCache& mapInputs)
         if (tx.vin[i].scriptWitness.IsNull())
             continue;
 
-        const CTxOut &prev = mapInputs.AccessCoin(tx.vin[i].prevout).out;
+        const CTxOut &prev = tx.vin[i].m_is_pegin ? GetPeginOutputFromWitness(tx.vin[i].m_pegin_witness) : mapInputs.AccessCoin(tx.vin[i].prevout).out;
 
         // get the scriptPubKey corresponding to this input:
         CScript prevScript = prev.scriptPubKey;
diff --git a/src/test/mempool_tests.cpp b/src/test/mempool_tests.cpp
index e416de098e..ab52f07ca7 100644
--- a/src/test/mempool_tests.cpp
+++ b/src/test/mempool_tests.cpp
@@ -3,6 +3,7 @@
 // file COPYING or http://www.opensource.org/licenses/mit-license.php.
 
 #include <policy/policy.h>
+#include <policy/fees.h>
 #include <txmempool.h>
 #include <util.h>
 
@@ -389,7 +390,8 @@ BOOST_AUTO_TEST_CASE(MempoolAncestorIndexingTest)
     /* after tx6 is mined, tx7 should move up in the sort */
     std::vector<CTransactionRef> vtx;
     vtx.push_back(MakeTransactionRef(tx6));
-    pool.removeForBlock(vtx, 1);
+    std::set<std::pair<uint256, COutPoint>> setPeginsSpentDummy;
+    pool.removeForBlock(vtx, 1, setPeginsSpentDummy);
 
     sortedOrder.erase(sortedOrder.begin()+1);
     // Ties are broken by hash
@@ -418,6 +420,93 @@ BOOST_AUTO_TEST_CASE(MempoolAncestorIndexingTest)
     CheckSort<ancestor_score>(pool, sortedOrder);
 }
 
+// ELEMENTS:
+BOOST_AUTO_TEST_CASE(PeginSpentTest)
+{
+    CBlockPolicyEstimator feeEst;
+    CTxMemPool pool(&feeEst);
+    LOCK(pool.cs);
+
+    std::set<std::pair<uint256, COutPoint> > setPeginsSpent;
+    TestMemPoolEntryHelper entry;
+
+    std::pair<uint256, COutPoint> pegin1, pegin2, pegin3;
+    GetRandBytes(pegin1.first.begin(), pegin1.first.size());
+    GetRandBytes(pegin2.first.begin(), pegin2.first.size());
+    GetRandBytes(pegin3.first.begin(), pegin3.first.size());
+    GetRandBytes(pegin1.second.hash.begin(), pegin1.second.hash.size());
+    GetRandBytes(pegin2.second.hash.begin(), pegin2.second.hash.size());
+    pegin3.second.hash = pegin2.second.hash;
+    pegin1.second.n = 0;
+    pegin2.second.n = 0;
+    pegin3.second.n = 1;
+
+    CMutableTransaction tx;
+    tx.vin.resize(1);
+    tx.vout.resize(1);
+    tx.vout[0].nValue = 0;
+    const uint256 tx1Hash(tx.GetHash());
+    pool.addUnchecked(tx1Hash, entry.PeginsSpent(setPeginsSpent).FromTx(tx));
+    BOOST_CHECK(pool.mapPeginsSpentToTxid.empty());
+
+    setPeginsSpent = {pegin1};
+    GetRandBytes(tx.vin[0].prevout.hash.begin(), tx.vin[0].prevout.hash.size());
+    tx.vout.resize(2);
+    tx.vout[1].nValue = 0;
+    const uint256 tx2Hash(tx.GetHash());
+    pool.addUnchecked(tx2Hash, entry.PeginsSpent(setPeginsSpent).FromTx(tx));
+    BOOST_CHECK_EQUAL(pool.mapPeginsSpentToTxid[pegin1].ToString(), tx2Hash.ToString());
+
+    setPeginsSpent = {pegin2};
+    GetRandBytes(tx.vin[0].prevout.hash.begin(), tx.vin[0].prevout.hash.size());
+    tx.vout.resize(3);
+    tx.vout[2].nValue = 0;
+    const uint256 tx3Hash(tx.GetHash());
+    pool.addUnchecked(tx3Hash, entry.PeginsSpent(setPeginsSpent).FromTx(tx));
+    BOOST_CHECK_EQUAL(pool.mapPeginsSpentToTxid[pegin2].ToString(), tx3Hash.ToString());
+
+    setPeginsSpent = {pegin3};
+    GetRandBytes(tx.vin[0].prevout.hash.begin(), tx.vin[0].prevout.hash.size());
+    tx.vout.resize(4);
+    tx.vout[3].nValue = 0;
+    CTransactionRef txref(MakeTransactionRef(tx));
+    pool.removeForBlock({txref}, 1, setPeginsSpent);
+
+    BOOST_CHECK_EQUAL(pool.size(), 3);
+    BOOST_CHECK_EQUAL(pool.mapPeginsSpentToTxid.size(), 2);
+    BOOST_CHECK_EQUAL(pool.mapPeginsSpentToTxid[pegin1].ToString(), tx2Hash.ToString());
+    BOOST_CHECK_EQUAL(pool.mapPeginsSpentToTxid[pegin2].ToString(), tx3Hash.ToString());
+
+    setPeginsSpent = {pegin1};
+    GetRandBytes(tx.vin[0].prevout.hash.begin(), tx.vin[0].prevout.hash.size());
+    tx.vout.resize(5);
+    tx.vout[4].nValue = 0;
+    txref = MakeTransactionRef(tx);
+    pool.removeForBlock({txref}, 2, setPeginsSpent);
+
+    BOOST_CHECK_EQUAL(pool.size(), 2);
+    BOOST_CHECK_EQUAL(pool.mapPeginsSpentToTxid.size(), 1);
+    BOOST_CHECK_EQUAL(pool.mapPeginsSpentToTxid[pegin2].ToString(), tx3Hash.ToString());
+
+    setPeginsSpent = {pegin1, pegin3};
+    GetRandBytes(tx.vin[0].prevout.hash.begin(), tx.vin[0].prevout.hash.size());
+    tx.vout.resize(6);
+    tx.vout[5].nValue = 0;
+    const uint256 tx4Hash(tx.GetHash());
+    pool.addUnchecked(tx4Hash, entry.PeginsSpent(setPeginsSpent).FromTx(tx));
+    BOOST_CHECK_EQUAL(pool.mapPeginsSpentToTxid[pegin1].ToString(), tx4Hash.ToString());
+    BOOST_CHECK_EQUAL(pool.mapPeginsSpentToTxid[pegin3].ToString(), tx4Hash.ToString());
+
+    setPeginsSpent = {pegin2, pegin3};
+    GetRandBytes(tx.vin[0].prevout.hash.begin(), tx.vin[0].prevout.hash.size());
+    tx.vout.resize(7);
+    tx.vout[6].nValue = 0;
+    txref = MakeTransactionRef(tx);
+    pool.removeForBlock({txref}, 3, setPeginsSpent);
+
+    BOOST_CHECK_EQUAL(pool.size(), 1);
+    BOOST_CHECK(pool.mapPeginsSpentToTxid.empty());
+}
 
 BOOST_AUTO_TEST_CASE(MempoolSizeLimitTest)
 {
@@ -549,7 +638,8 @@ BOOST_AUTO_TEST_CASE(MempoolSizeLimitTest)
     SetMockTime(42 + CTxMemPool::ROLLING_FEE_HALFLIFE);
     BOOST_CHECK_EQUAL(pool.GetMinFee(1).GetFeePerK(), maxFeeRateRemoved.GetFeePerK() + 1000);
     // ... we should keep the same min fee until we get a block
-    pool.removeForBlock(vtx, 1);
+    std::set<std::pair<uint256, COutPoint>> setPeginsSpentDummy;
+    pool.removeForBlock(vtx, 1, setPeginsSpentDummy);
     SetMockTime(42 + 2*CTxMemPool::ROLLING_FEE_HALFLIFE);
     BOOST_CHECK_EQUAL(pool.GetMinFee(1).GetFeePerK(), llround((maxFeeRateRemoved.GetFeePerK() + 1000)/2.0));
     // ... then feerate should drop 1/2 each halflife
diff --git a/src/test/policyestimator_tests.cpp b/src/test/policyestimator_tests.cpp
index 26a0b495d9..cee463dfd9 100644
--- a/src/test/policyestimator_tests.cpp
+++ b/src/test/policyestimator_tests.cpp
@@ -23,6 +23,7 @@ BOOST_AUTO_TEST_CASE(BlockPolicyEstimates)
     CAmount basefee(2000);
     CAmount deltaFee(100);
     std::vector<CAmount> feeV;
+    std::set<std::pair<uint256, COutPoint>> setPeginsSpentDummy;
 
     // Populate vectors of increasing fees
     for (int j = 0; j < 10; j++) {
@@ -74,7 +75,7 @@ BOOST_AUTO_TEST_CASE(BlockPolicyEstimates)
                 txHashes[9-h].pop_back();
             }
         }
-        mpool.removeForBlock(block, ++blocknum);
+        mpool.removeForBlock(block, ++blocknum, setPeginsSpentDummy);
         block.clear();
         // Check after just a few txs that combining buckets works as expected
         if (blocknum == 3) {
@@ -113,7 +114,7 @@ BOOST_AUTO_TEST_CASE(BlockPolicyEstimates)
     // Mine 50 more blocks with no transactions happening, estimates shouldn't change
     // We haven't decayed the moving average enough so we still have enough data points in every bucket
     while (blocknum < 250)
-        mpool.removeForBlock(block, ++blocknum);
+        mpool.removeForBlock(block, ++blocknum, setPeginsSpentDummy);
 
     BOOST_CHECK(feeEst.estimateFee(1) == CFeeRate(0));
     for (int i = 2; i < 10;i++) {
@@ -133,7 +134,7 @@ BOOST_AUTO_TEST_CASE(BlockPolicyEstimates)
                 txHashes[j].push_back(hash);
             }
         }
-        mpool.removeForBlock(block, ++blocknum);
+        mpool.removeForBlock(block, ++blocknum, setPeginsSpentDummy);
     }
 
     for (int i = 1; i < 10;i++) {
@@ -150,7 +151,7 @@ BOOST_AUTO_TEST_CASE(BlockPolicyEstimates)
             txHashes[j].pop_back();
         }
     }
-    mpool.removeForBlock(block, 266);
+    mpool.removeForBlock(block, 266, setPeginsSpentDummy);
     block.clear();
     BOOST_CHECK(feeEst.estimateFee(1) == CFeeRate(0));
     for (int i = 2; i < 10;i++) {
@@ -171,7 +172,7 @@ BOOST_AUTO_TEST_CASE(BlockPolicyEstimates)
 
             }
         }
-        mpool.removeForBlock(block, ++blocknum);
+        mpool.removeForBlock(block, ++blocknum, setPeginsSpentDummy);
         block.clear();
     }
     BOOST_CHECK(feeEst.estimateFee(1) == CFeeRate(0));
diff --git a/src/test/test_bitcoin.cpp b/src/test/test_bitcoin.cpp
index 3c1005de89..fd473af780 100644
--- a/src/test/test_bitcoin.cpp
+++ b/src/test/test_bitcoin.cpp
@@ -46,7 +46,7 @@ std::ostream& operator<<(std::ostream& os, const uint256& num)
     return os;
 }
 
-BasicTestingSetup::BasicTestingSetup(const std::string& chainName)
+BasicTestingSetup::BasicTestingSetup(const std::string& chainName, const std::string& fedpegscript)
     : m_path_root(fs::temp_directory_path() / "test_bitcoin" / strprintf("%lu_%i", (unsigned long)GetTime(), (int)(InsecureRandRange(1 << 30))))
 {
     SHA256AutoDetect();
@@ -57,6 +57,10 @@ BasicTestingSetup::BasicTestingSetup(const std::string& chainName)
     InitSignatureCache();
     InitScriptExecutionCache();
     fCheckBlockIndex = true;
+    // Hack to allow testing of fedpeg args
+    if (!fedpegscript.empty()) {
+        gArgs.SoftSetArg("-fedpegscript", fedpegscript);
+    }
     // CreateAndProcessBlock() does not support building SegWit blocks, so don't activate in these tests.
     // TODO: fix the code to support SegWit blocks.
     gArgs.ForceSetArg("-vbparams", strprintf("segwit:0:%d", (int64_t)Consensus::BIP9Deployment::NO_TIMEOUT));
@@ -78,7 +82,7 @@ fs::path BasicTestingSetup::SetDataDir(const std::string& name)
     return ret;
 }
 
-TestingSetup::TestingSetup(const std::string& chainName) : BasicTestingSetup(chainName)
+TestingSetup::TestingSetup(const std::string& chainName, const std::string& fedpegscript) : BasicTestingSetup(chainName, fedpegscript)
 {
     SetDataDir("tempdir");
     const CChainParams& chainparams = Params();
@@ -184,7 +188,7 @@ CTxMemPoolEntry TestMemPoolEntryHelper::FromTx(const CMutableTransaction &tx) {
 CTxMemPoolEntry TestMemPoolEntryHelper::FromTx(const CTransactionRef& tx)
 {
     return CTxMemPoolEntry(tx, nFee, nTime, nHeight,
-                           spendsCoinbase, sigOpCost, lp);
+                           spendsCoinbase, sigOpCost, lp, setPeginsSpent);
 }
 
 /**
diff --git a/src/test/test_bitcoin.h b/src/test/test_bitcoin.h
index b87d9bea5d..14bfccaf46 100644
--- a/src/test/test_bitcoin.h
+++ b/src/test/test_bitcoin.h
@@ -43,7 +43,7 @@ static inline bool InsecureRandBool() { return insecure_rand_ctx.randbool(); }
 struct BasicTestingSetup {
     ECCVerifyHandle globalVerifyHandle;
 
-    explicit BasicTestingSetup(const std::string& chainName = CBaseChainParams::MAIN);
+    explicit BasicTestingSetup(const std::string& chainName = CBaseChainParams::MAIN, const std::string& fedpegscript = "");
     ~BasicTestingSetup();
 
     fs::path SetDataDir(const std::string& name);
@@ -69,7 +69,7 @@ struct TestingSetup: public BasicTestingSetup {
     CScheduler scheduler;
     std::unique_ptr<PeerLogicValidation> peerLogic;
 
-    explicit TestingSetup(const std::string& chainName = CBaseChainParams::MAIN);
+    explicit TestingSetup(const std::string& chainName = CBaseChainParams::MAIN, const std::string& fedpegscript = "");
     ~TestingSetup();
 };
 
@@ -106,6 +106,8 @@ struct TestMemPoolEntryHelper
     bool spendsCoinbase;
     unsigned int sigOpCost;
     LockPoints lp;
+    // ELEMENTS:
+    std::set<std::pair<uint256, COutPoint>> setPeginsSpent;
 
     TestMemPoolEntryHelper() :
         nFee(0), nTime(0), nHeight(1),
@@ -120,6 +122,8 @@ struct TestMemPoolEntryHelper
     TestMemPoolEntryHelper &Height(unsigned int _height) { nHeight = _height; return *this; }
     TestMemPoolEntryHelper &SpendsCoinbase(bool _flag) { spendsCoinbase = _flag; return *this; }
     TestMemPoolEntryHelper &SigOpsCost(unsigned int _sigopsCost) { sigOpCost = _sigopsCost; return *this; }
+    // ELEMENTS:
+    TestMemPoolEntryHelper &PeginsSpent(std::set<std::pair<uint256, COutPoint> >& _setPeginsSpent) { setPeginsSpent = _setPeginsSpent; return *this; }
 };
 
 CBlock getBlock13b8a();
diff --git a/src/txdb.cpp b/src/txdb.cpp
index 98f5cde9b7..4a2a5502fe 100644
--- a/src/txdb.cpp
+++ b/src/txdb.cpp
@@ -34,6 +34,7 @@ static const char DB_LAST_BLOCK = 'l';
 
 // ELEMENTS:
 static const char DB_PEGIN_FLAG = 'w';
+static const char DB_INVALID_BLOCK_Q = 'q';
 
 namespace {
 
@@ -270,6 +271,14 @@ bool CBlockTreeDB::ReadFlag(const std::string &name, bool &fValue) {
     return true;
 }
 
+// ELEMENTS:
+bool CBlockTreeDB::ReadInvalidBlockQueue(std::vector<uint256> &vBlocks) {
+    return Read(std::make_pair(DB_INVALID_BLOCK_Q, uint256S("0")), vBlocks);//FIXME: why uint 56 and not ""
+}
+bool CBlockTreeDB::WriteInvalidBlockQueue(const std::vector<uint256> &vBlocks) {
+    return Write(std::make_pair(DB_INVALID_BLOCK_Q, uint256S("0")), vBlocks);
+}
+
 bool CBlockTreeDB::LoadBlockIndexGuts(const Consensus::Params& consensusParams, std::function<CBlockIndex*(const uint256&)> insertBlockIndex)
 {
     std::unique_ptr<CDBIterator> pcursor(NewIterator());
diff --git a/src/txdb.h b/src/txdb.h
index f5c231c528..52117dce2a 100644
--- a/src/txdb.h
+++ b/src/txdb.h
@@ -98,6 +98,9 @@ public:
     bool WriteFlag(const std::string &name, bool fValue);
     bool ReadFlag(const std::string &name, bool &fValue);
     bool LoadBlockIndexGuts(const Consensus::Params& consensusParams, std::function<CBlockIndex*(const uint256&)> insertBlockIndex);
+    // ELEMENTS:
+    bool ReadInvalidBlockQueue(std::vector<uint256> &vBlocks);
+    bool WriteInvalidBlockQueue(const std::vector<uint256> &vBlocks);
 };
 
 #endif // BITCOIN_TXDB_H
diff --git a/src/txmempool.cpp b/src/txmempool.cpp
index d0e48fba62..f9dd8488c7 100644
--- a/src/txmempool.cpp
+++ b/src/txmempool.cpp
@@ -20,9 +20,12 @@
 
 CTxMemPoolEntry::CTxMemPoolEntry(const CTransactionRef& _tx, const CAmount& _nFee,
                                  int64_t _nTime, unsigned int _entryHeight,
-                                 bool _spendsCoinbase, int64_t _sigOpsCost, LockPoints lp):
+                                 bool _spendsCoinbase,
+                                 int64_t _sigOpsCost, LockPoints lp,
+                                 std::set<std::pair<uint256, COutPoint>>& _setPeginsSpent):
     tx(_tx), nFee(_nFee), nTime(_nTime), entryHeight(_entryHeight),
-    spendsCoinbase(_spendsCoinbase), sigOpCost(_sigOpsCost), lockPoints(lp)
+    spendsCoinbase(_spendsCoinbase), sigOpCost(_sigOpsCost), lockPoints(lp),
+    setPeginsSpent(_setPeginsSpent)
 {
     nTxWeight = GetTransactionWeight(*tx);
     nUsageSize = RecursiveDynamicUsage(tx);
@@ -409,6 +412,12 @@ void CTxMemPool::addUnchecked(const uint256& hash, const CTxMemPoolEntry &entry,
 
     vTxHashes.emplace_back(tx.GetWitnessHash(), newit);
     newit->vTxHashesIdx = vTxHashes.size() - 1;
+
+    typedef std::pair<uint256, COutPoint> PeginPair;
+    for(const PeginPair& it : entry.setPeginsSpent) {
+        std::pair<std::map<std::pair<uint256, COutPoint>, uint256>::iterator, bool> ret = mapPeginsSpentToTxid.insert(std::make_pair(it, hash));
+        assert(ret.second);
+    }
 }
 
 void CTxMemPool::removeUnchecked(txiter it, MemPoolRemovalReason reason)
@@ -418,6 +427,12 @@ void CTxMemPool::removeUnchecked(txiter it, MemPoolRemovalReason reason)
     for (const CTxIn& txin : it->GetTx().vin)
         mapNextTx.erase(txin.prevout);
 
+    // ELEMENTS:
+    typedef std::pair<uint256, COutPoint> PeginPair;
+    for (const PeginPair& it2 : it->setPeginsSpent) {
+        mapPeginsSpentToTxid.erase(it2);
+    }
+
     if (vTxHashes.size() > 1) {
         vTxHashes[it->vTxHashesIdx] = std::move(vTxHashes.back());
         vTxHashes[it->vTxHashesIdx].second->vTxHashesIdx = it->vTxHashesIdx;
@@ -554,7 +569,7 @@ void CTxMemPool::removeConflicts(const CTransaction &tx)
 /**
  * Called when a block is connected. Removes from mempool and updates the miner fee estimator.
  */
-void CTxMemPool::removeForBlock(const std::vector<CTransactionRef>& vtx, unsigned int nBlockHeight)
+void CTxMemPool::removeForBlock(const std::vector<CTransactionRef>& vtx, unsigned int nBlockHeight, const std::set<std::pair<uint256, COutPoint>>& setPeginsSpent)
 {
     LOCK(cs);
     std::vector<const CTxMemPoolEntry*> entries;
@@ -579,6 +594,24 @@ void CTxMemPool::removeForBlock(const std::vector<CTransactionRef>& vtx, unsigne
         removeConflicts(*tx);
         ClearPrioritisation(tx->GetHash());
     }
+
+    // ELEMENTS:
+    // Eject any conflicting pegins
+    for (std::set<std::pair<uint256, COutPoint> >::const_iterator it = setPeginsSpent.begin(); it != setPeginsSpent.end(); it++) {
+        std::map<std::pair<uint256, COutPoint>, uint256>::const_iterator it2 = mapPeginsSpentToTxid.find(*it);
+        if (it2 != mapPeginsSpentToTxid.end()) {
+            uint256 tx_id = it2->second;
+            txiter txit = mapTx.find(tx_id);
+            assert(txit != mapTx.end());
+            const CTransaction& tx = txit->GetTx();
+            setEntries stage;
+            stage.insert(txit);
+            RemoveStaged(stage, true);
+            removeRecursive(tx, MemPoolRemovalReason::CONFLICT);
+            ClearPrioritisation(tx_id);
+        }
+    }
+
     lastRollingFeeUpdate = GetTime();
     blockSinceLastRollingFeeBump = true;
 }
@@ -602,13 +635,21 @@ void CTxMemPool::clear()
     _clear();
 }
 
-static void CheckInputsAndUpdateCoins(const CTransaction& tx, CCoinsViewCache& mempoolDuplicate, const int64_t spendheight)
+static void CheckInputsAndUpdateCoins(const CTxMemPoolEntry& entry, CCoinsViewCache& mempoolDuplicate, const int64_t spendheight, std::set<std::pair<uint256, COutPoint>>& setGlobalPeginsSpent)
 {
+    CTransaction tx = entry.GetTx();
     CValidationState state;
     CAmount txfee = 0;
-    bool fCheckResult = tx.IsCoinBase() || Consensus::CheckTxInputs(tx, state, mempoolDuplicate, spendheight, txfee);
+    std::set<std::pair<uint256, COutPoint> > setPeginsSpent;
+    bool fCheckResult = tx.IsCoinBase() || Consensus::CheckTxInputs(tx, state, mempoolDuplicate, spendheight, txfee, setPeginsSpent);
     assert(fCheckResult);
     UpdateCoins(tx, mempoolDuplicate, 1000000);
+
+    // ELEMENTS:
+    assert(setPeginsSpent == entry.setPeginsSpent);
+    size_t prevPeginsCount = setGlobalPeginsSpent.size();
+    setGlobalPeginsSpent.insert(setPeginsSpent.begin(), setPeginsSpent.end());
+    assert(setGlobalPeginsSpent.size() == prevPeginsCount + setPeginsSpent.size());
 }
 
 void CTxMemPool::check(const CCoinsViewCache *pcoins) const
@@ -629,6 +670,9 @@ void CTxMemPool::check(const CCoinsViewCache *pcoins) const
     const int64_t spendheight = GetSpendHeight(mempoolDuplicate);
 
     std::list<const CTxMemPoolEntry*> waitingOnDependants;
+    // ELEMENTS:
+    std::set<std::pair<uint256, COutPoint> > setGlobalPeginsSpent;
+
     for (indexed_transaction_set::const_iterator it = mapTx.begin(); it != mapTx.end(); it++) {
         unsigned int i = 0;
         checkTotal += it->GetTxSize();
@@ -654,7 +698,8 @@ void CTxMemPool::check(const CCoinsViewCache *pcoins) const
                     parentSigOpCost += it2->GetSigOpCost();
                 }
             } else {
-                assert(pcoins->HaveCoin(txin.prevout));
+                // peg-in inputs are not sanity-checked to be valid
+                assert(txin.m_is_pegin || pcoins->HaveCoin(txin.prevout));
             }
             // Check whether its inputs are marked in mapNextTx.
             auto it3 = mapNextTx.find(txin.prevout);
@@ -704,7 +749,7 @@ void CTxMemPool::check(const CCoinsViewCache *pcoins) const
         if (fDependsWait)
             waitingOnDependants.push_back(&(*it));
         else {
-            CheckInputsAndUpdateCoins(tx, mempoolDuplicate, spendheight);
+            CheckInputsAndUpdateCoins(*it, mempoolDuplicate, spendheight, setGlobalPeginsSpent);
         }
     }
     unsigned int stepsSinceLastRemove = 0;
@@ -716,7 +761,7 @@ void CTxMemPool::check(const CCoinsViewCache *pcoins) const
             stepsSinceLastRemove++;
             assert(stepsSinceLastRemove < waitingOnDependants.size());
         } else {
-            CheckInputsAndUpdateCoins(entry->GetTx(), mempoolDuplicate, spendheight);
+            CheckInputsAndUpdateCoins(*entry, mempoolDuplicate, spendheight, setGlobalPeginsSpent);
             stepsSinceLastRemove = 0;
         }
     }
@@ -728,6 +773,18 @@ void CTxMemPool::check(const CCoinsViewCache *pcoins) const
         assert(&tx == it->second);
     }
 
+    //
+    // ELEMENTS:
+    for (std::set<std::pair<uint256, COutPoint> >::const_iterator it = setGlobalPeginsSpent.begin(); it != setGlobalPeginsSpent.end(); it++) {
+        assert(!pcoins->IsPeginSpent(*it));
+    }
+    for (std::map<std::pair<uint256, COutPoint>, uint256>::const_iterator it = mapPeginsSpentToTxid.begin(); it != mapPeginsSpentToTxid.end(); it++) {
+        assert(setGlobalPeginsSpent.erase(it->first));
+    }
+    assert(setGlobalPeginsSpent.size() == 0);
+    // END ELEMENTS
+    //
+
     assert(totalTxSize == checkTotal);
     assert(innerUsage == cachedInnerUsage);
 }
diff --git a/src/txmempool.h b/src/txmempool.h
index aee58cb615..adad69b6c9 100644
--- a/src/txmempool.h
+++ b/src/txmempool.h
@@ -89,10 +89,14 @@ private:
     int64_t nSigOpCostWithAncestors;
 
 public:
+    // ELEMENTS:
+    std::set<std::pair<uint256, COutPoint>> setPeginsSpent;
+
     CTxMemPoolEntry(const CTransactionRef& _tx, const CAmount& _nFee,
                     int64_t _nTime, unsigned int _entryHeight,
                     bool spendsCoinbase,
-                    int64_t nSigOpsCost, LockPoints lp);
+                    int64_t nSigOpsCost, LockPoints lp,
+                    std::set<std::pair<uint256, COutPoint>>& setPeginsSpent);
 
     const CTransaction& GetTx() const { return *this->tx; }
     CTransactionRef GetSharedTx() const { return this->tx; }
@@ -547,7 +551,8 @@ public:
     void removeRecursive(const CTransaction &tx, MemPoolRemovalReason reason = MemPoolRemovalReason::UNKNOWN);
     void removeForReorg(const CCoinsViewCache *pcoins, unsigned int nMemPoolHeight, int flags);
     void removeConflicts(const CTransaction &tx) EXCLUSIVE_LOCKS_REQUIRED(cs);
-    void removeForBlock(const std::vector<CTransactionRef>& vtx, unsigned int nBlockHeight);
+    void removeForBlock(const std::vector<CTransactionRef>& vtx, unsigned int nBlockHeight,
+                        const std::set<std::pair<uint256, COutPoint>>& setPeginsSpent);
 
     void clear();
     void _clear() EXCLUSIVE_LOCKS_REQUIRED(cs); //lock free
diff --git a/src/validation.cpp b/src/validation.cpp
index 387aafb481..e46f198d24 100644
--- a/src/validation.cpp
+++ b/src/validation.cpp
@@ -172,7 +172,8 @@ public:
     // Block (dis)connection on a given view:
     DisconnectResult DisconnectBlock(const CBlock& block, const CBlockIndex* pindex, CCoinsViewCache& view);
     bool ConnectBlock(const CBlock& block, CValidationState& state, CBlockIndex* pindex,
-                    CCoinsViewCache& view, const CChainParams& chainparams, bool fJustCheck = false);
+                    CCoinsViewCache& view, const CChainParams& chainparams,
+                    std::set<std::pair<uint256, COutPoint>>* setPeginsSpent, bool fJustCheck = false);
 
     // Block disconnection on our pcoinsTip:
     bool DisconnectTip(CValidationState& state, const CChainParams& chainparams, DisconnectedBlockTransactions *disconnectpool);
@@ -311,7 +312,10 @@ enum class FlushStateMode {
 static bool FlushStateToDisk(const CChainParams& chainParams, CValidationState &state, FlushStateMode mode, int nManualPruneHeight=0);
 static void FindFilesToPruneManual(std::set<int>& setFilesToPrune, int nManualPruneHeight);
 static void FindFilesToPrune(std::set<int>& setFilesToPrune, uint64_t nPruneAfterHeight);
-bool CheckInputs(const CTransaction& tx, CValidationState &state, const CCoinsViewCache &inputs, bool fScriptChecks, unsigned int flags, bool cacheSigStore, bool cacheFullScriptStore, PrecomputedTransactionData& txdata, std::vector<CScriptCheck> *pvChecks = nullptr);
+bool CheckInputs(const CTransaction& tx, CValidationState &state, const CCoinsViewCache &inputs,
+        bool fScriptChecks, unsigned int flags, bool cacheSigStore, bool cacheFullScriptStore,
+        PrecomputedTransactionData& txdata,
+        std::vector<CScriptCheck> *pvChecks = nullptr);
 static FILE* OpenUndoFile(const CDiskBlockPos &pos, bool fReadOnly = false);
 
 bool CheckFinalTx(const CTransaction &tx, int flags)
@@ -661,6 +665,7 @@ static bool AcceptToMemoryPoolWorker(const CChainParams& chainparams, CTxMemPool
     {
         CCoinsView dummy;
         CCoinsViewCache view(&dummy);
+        std::set<std::pair<uint256, COutPoint> > setPeginsSpent;
 
         LockPoints lp;
         CCoinsViewMemPool viewMemPool(pcoinsTip.get(), pool);
@@ -708,7 +713,7 @@ static bool AcceptToMemoryPoolWorker(const CChainParams& chainparams, CTxMemPool
             return state.DoS(0, false, REJECT_NONSTANDARD, "non-BIP68-final");
 
         CAmount nFees = 0;
-        if (!Consensus::CheckTxInputs(tx, state, view, GetSpendHeight(view), nFees)) {
+        if (!Consensus::CheckTxInputs(tx, state, view, GetSpendHeight(view), nFees, setPeginsSpent)) {
             return error("%s: Consensus::CheckTxInputs: %s, %s", __func__, tx.GetHash().ToString(), FormatStateMessage(state));
         }
 
@@ -742,7 +747,7 @@ static bool AcceptToMemoryPoolWorker(const CChainParams& chainparams, CTxMemPool
         }
 
         CTxMemPoolEntry entry(ptx, nFees, nAcceptTime, chainActive.Height(),
-                              fSpendsCoinbase, nSigOpsCost, lp);
+                              fSpendsCoinbase, nSigOpsCost, lp, setPeginsSpent);
         unsigned int nSize = entry.GetTxSize();
 
         // Check that the transaction doesn't have an excessive number of
@@ -931,10 +936,11 @@ static bool AcceptToMemoryPoolWorker(const CChainParams& chainparams, CTxMemPool
             // need to turn both off, and compare against just turning off CLEANSTACK
             // to see if the failure is specifically due to witness validation.
             CValidationState stateDummy; // Want reported failures to be from first CheckInputs
-            if (!tx.HasWitness() && CheckInputs(tx, stateDummy, view, true, scriptVerifyFlags & ~(SCRIPT_VERIFY_WITNESS | SCRIPT_VERIFY_CLEANSTACK), true, false, txdata) &&
-                !CheckInputs(tx, stateDummy, view, true, scriptVerifyFlags & ~SCRIPT_VERIFY_CLEANSTACK, true, false, txdata)) {
-                // Only the witness is missing, so the transaction itself may be fine.
-                state.SetCorruptionPossible();
+            if (!tx.HasWitness() && CheckInputs(tx, stateDummy, view, true, scriptVerifyFlags & ~(SCRIPT_VERIFY_WITNESS | SCRIPT_VERIFY_CLEANSTACK), true, false, txdata)) {
+                if (!CheckInputs(tx, stateDummy, view, true, scriptVerifyFlags & ~SCRIPT_VERIFY_CLEANSTACK, true, false, txdata)) {
+                    // Only the witness is missing, so the transaction itself may be fine.
+                    state.SetCorruptionPossible();
+                }
             }
             return false; // state filled in by CheckInputs
         }
@@ -1352,9 +1358,16 @@ void UpdateCoins(const CTransaction& tx, CCoinsViewCache& inputs, CTxUndo &txund
     if (!tx.IsCoinBase()) {
         txundo.vprevout.reserve(tx.vin.size());
         for (const CTxIn &txin : tx.vin) {
-            txundo.vprevout.emplace_back();
-            bool is_spent = inputs.SpendCoin(txin.prevout, &txundo.vprevout.back());
-            assert(is_spent);
+            if (txin.m_is_pegin) {
+                std::pair<uint256, COutPoint> outpoint = std::make_pair(uint256(txin.m_pegin_witness.stack[2]), txin.prevout);
+                inputs.SetPeginSpent(outpoint, true);
+                // Dummy undo
+                txundo.vprevout.emplace_back();
+            } else {
+                txundo.vprevout.emplace_back();
+                bool is_spent = inputs.SpendCoin(txin.prevout, &txundo.vprevout.back());
+                assert(is_spent);
+            }
         }
     }
     // add outputs
@@ -1441,7 +1454,16 @@ bool CheckInputs(const CTransaction& tx, CValidationState &state, const CCoinsVi
 
             for (unsigned int i = 0; i < tx.vin.size(); i++) {
                 const COutPoint &prevout = tx.vin[i].prevout;
-                const Coin& coin = inputs.AccessCoin(prevout);
+
+                // ELEMENTS:
+                // If input is peg-in, create "coin" to evaluate against
+                Coin pegin_coin;
+                if (tx.vin[i].m_is_pegin) {
+                    // Height of "output" in script evaluation will be 0
+                    pegin_coin = Coin(GetPeginOutputFromWitness(tx.vin[i].m_pegin_witness), 0, false);
+                }
+
+                const Coin& coin = tx.vin[i].m_is_pegin ? pegin_coin : inputs.AccessCoin(prevout);
                 assert(!coin.IsSpent());
 
                 // We very carefully only pass in things to CScriptCheck which
@@ -1465,8 +1487,9 @@ bool CheckInputs(const CTransaction& tx, CValidationState &state, const CCoinsVi
                         // non-upgraded nodes.
                         CScriptCheck check2(coin.out, tx, i,
                                 flags & ~STANDARD_NOT_MANDATORY_VERIFY_FLAGS, cacheSigStore, &txdata);
-                        if (check2())
+                        if (check2()) {
                             return state.Invalid(false, REJECT_NONSTANDARD, strprintf("non-mandatory-script-verify-flag (%s)", ScriptErrorString(check.GetScriptError())));
+                        }
                     }
                     // Failures of other flags indicate a transaction that is
                     // invalid in new blocks, e.g. an invalid P2SH. We DoS ban
@@ -1577,29 +1600,43 @@ static bool AbortNode(CValidationState& state, const std::string& strMessage, co
  * @param out The out point that corresponds to the tx input.
  * @return A DisconnectResult as an int
  */
-int ApplyTxInUndo(Coin&& undo, CCoinsViewCache& view, const COutPoint& out)
+int ApplyTxInUndo(Coin&& undo, CCoinsViewCache& view, const COutPoint& out, const CTxIn& txin, const CScriptWitness& pegin_witness)
 {
     bool fClean = true;
 
-    if (view.HaveCoin(out)) fClean = false; // overwriting transaction output
+    if (!txin.m_is_pegin) {
+        if (view.HaveCoin(out)) fClean = false; // overwriting transaction output
 
-    if (undo.nHeight == 0) {
-        // Missing undo metadata (height and coinbase). Older versions included this
-        // information only in undo records for the last spend of a transactions'
-        // outputs. This implies that it must be present for some other output of the same tx.
-        const Coin& alternate = AccessByTxid(view, out.hash);
-        if (!alternate.IsSpent()) {
-            undo.nHeight = alternate.nHeight;
-            undo.fCoinBase = alternate.fCoinBase;
+        if (undo.nHeight == 0) {
+            // Missing undo metadata (height and coinbase). Older versions included this
+            // information only in undo records for the last spend of a transactions'
+            // outputs. This implies that it must be present for some other output of the same tx.
+            const Coin& alternate = AccessByTxid(view, out.hash);
+            if (!alternate.IsSpent()) {
+                undo.nHeight = alternate.nHeight;
+                undo.fCoinBase = alternate.fCoinBase;
+            } else {
+                return DISCONNECT_FAILED; // adding output for transaction without known metadata
+            }
+        }
+        // The potential_overwrite parameter to AddCoin is only allowed to be false if we know for
+        // sure that the coin did not already exist in the cache. As we have queried for that above
+        // using HaveCoin, we don't need to guess. When fClean is false, a coin already existed and
+        // it is an overwrite.
+        view.AddCoin(out, std::move(undo), !fClean);
+    } else {
+        if (!IsValidPeginWitness(pegin_witness, txin.prevout)) {
+            fClean = fClean && error("%s: peg-in occurred without proof", __func__);
         } else {
-            return DISCONNECT_FAILED; // adding output for transaction without known metadata
+            std::pair<uint256, COutPoint> outpoint = std::make_pair(uint256(pegin_witness.stack[2]), txin.prevout);
+            bool fSpent = view.IsPeginSpent(outpoint);
+            if (!fSpent) {
+                fClean = fClean && error("%s: peg-in bitcoin txid not marked spent", __func__);
+            } else {
+                view.SetPeginSpent(outpoint, false);
+            }
         }
     }
-    // The potential_overwrite parameter to AddCoin is only allowed to be false if we know for
-    // sure that the coin did not already exist in the cache. As we have queried for that above
-    // using HaveCoin, we don't need to guess. When fClean is false, a coin already existed and
-    // it is an overwrite.
-    view.AddCoin(out, std::move(undo), !fClean);
 
     return fClean ? DISCONNECT_OK : DISCONNECT_UNCLEAN;
 }
@@ -1649,7 +1686,8 @@ DisconnectResult CChainState::DisconnectBlock(const CBlock& block, const CBlockI
             }
             for (unsigned int j = tx.vin.size(); j-- > 0;) {
                 const COutPoint &out = tx.vin[j].prevout;
-                int res = ApplyTxInUndo(std::move(txundo.vprevout[j]), view, out);
+                const CScriptWitness& pegin_wit = tx.vin[j].m_pegin_witness;
+                int res = ApplyTxInUndo(std::move(txundo.vprevout[j]), view, out, tx.vin[j], pegin_wit);
                 if (res == DISCONNECT_FAILED) return DISCONNECT_FAILED;
                 fClean = fClean && res != DISCONNECT_UNCLEAN;
             }
@@ -1833,7 +1871,7 @@ static int64_t nBlocksTotal = 0;
  *  Validity checks that depend on the UTXO set are also done; ConnectBlock()
  *  can fail if those validity checks fail (among other reasons). */
 bool CChainState::ConnectBlock(const CBlock& block, CValidationState& state, CBlockIndex* pindex,
-                  CCoinsViewCache& view, const CChainParams& chainparams, bool fJustCheck)
+                  CCoinsViewCache& view, const CChainParams& chainparams, std::set<std::pair<uint256, COutPoint>>* setPeginsSpent, bool fJustCheck)
 {
     AssertLockHeld(cs_main);
     assert(pindex);
@@ -2037,6 +2075,11 @@ bool CChainState::ConnectBlock(const CBlock& block, CValidationState& state, CBl
     blockundo.vtxundo.reserve(block.vtx.size() - 1);
     std::vector<PrecomputedTransactionData> txdata;
     txdata.reserve(block.vtx.size()); // Required so that pointers to individual PrecomputedTransactionData don't get invalidated
+
+    // ELEMENTS:
+    // Used when ConnectBlock() results are unneeded for mempool ejection
+    std::set<std::pair<uint256, COutPoint>> setPeginsSpentDummy;
+
     for (unsigned int i = 0; i < block.vtx.size(); i++)
     {
         const CTransaction &tx = *(block.vtx[i]);
@@ -2046,7 +2089,8 @@ bool CChainState::ConnectBlock(const CBlock& block, CValidationState& state, CBl
         if (!tx.IsCoinBase())
         {
             CAmount txfee = 0;
-            if (!Consensus::CheckTxInputs(tx, state, view, pindex->nHeight, txfee)) {
+            if (!Consensus::CheckTxInputs(tx, state, view, pindex->nHeight, txfee,
+                        setPeginsSpent == NULL ? setPeginsSpentDummy : *setPeginsSpent)) {
                 return error("%s: Consensus::CheckTxInputs: %s, %s", __func__, tx.GetHash().ToString(), FormatStateMessage(state));
             }
             nFees += txfee;
@@ -2493,13 +2537,42 @@ bool CChainState::ConnectTip(CValidationState& state, const CChainParams& chainp
     int64_t nTime2 = GetTimeMicros(); nTimeReadFromDisk += nTime2 - nTime1;
     int64_t nTime3;
     LogPrint(BCLog::BENCH, "  - Load block from disk: %.2fms [%.2fs]\n", (nTime2 - nTime1) * MILLI, nTimeReadFromDisk * MICRO);
+
+    // ELEMENTS:
+    // For mempool removal with pegin conflicts
+    std::set<std::pair<uint256, COutPoint>> setPeginsSpent;
+
     {
         CCoinsViewCache view(pcoinsTip.get());
-        bool rv = ConnectBlock(blockConnecting, state, pindexNew, view, chainparams);
+        bool rv = ConnectBlock(blockConnecting, state, pindexNew, view, chainparams, &setPeginsSpent);
         GetMainSignals().BlockChecked(blockConnecting, state);
         if (!rv) {
-            if (state.IsInvalid())
+            if (state.IsInvalid()) {
                 InvalidBlockFound(pindexNew, state);
+
+                // ELEMENTS:
+                // Possibly result of RPC to mainchain bitcoind failure
+                // or unseen Bitcoin blocks.
+                // These blocks are later re-evaluated at an interval
+                // set by `-recheckpeginblockinterval`.
+                if (state.GetRejectCode() == REJECT_PEGIN) {
+                    //Write queue of invalid blocks that
+                    //must be cleared to continue operation
+                    std::vector<uint256> vinvalidBlocks;
+                    pblocktree->ReadInvalidBlockQueue(vinvalidBlocks);
+                    bool blockAlreadyInvalid = false;
+                    for (uint256& hash : vinvalidBlocks) {
+                        if (hash == blockConnecting.GetHash()) {
+                            blockAlreadyInvalid = true;
+                            break;
+                        }
+                    }
+                    if (!blockAlreadyInvalid) {
+                        vinvalidBlocks.push_back(blockConnecting.GetHash());
+                        pblocktree->WriteInvalidBlockQueue(vinvalidBlocks);
+                    }
+                }
+            }
             return error("ConnectTip(): ConnectBlock %s failed", pindexNew->GetBlockHash().ToString());
         }
         nTime3 = GetTimeMicros(); nTimeConnectTotal += nTime3 - nTime2;
@@ -2515,7 +2588,7 @@ bool CChainState::ConnectTip(CValidationState& state, const CChainParams& chainp
     int64_t nTime5 = GetTimeMicros(); nTimeChainState += nTime5 - nTime4;
     LogPrint(BCLog::BENCH, "  - Writing chainstate: %.2fms [%.2fs (%.2fms/blk)]\n", (nTime5 - nTime4) * MILLI, nTimeChainState * MICRO, nTimeChainState * MILLI / nBlocksTotal);
     // Remove conflicting transactions from the mempool.;
-    mempool.removeForBlock(blockConnecting.vtx, pindexNew->nHeight);
+    mempool.removeForBlock(blockConnecting.vtx, pindexNew->nHeight, setPeginsSpent);
     disconnectpool.removeForBlock(blockConnecting.vtx);
     // Update chainActive & related variables.
     chainActive.SetTip(pindexNew);
@@ -3642,7 +3715,7 @@ bool TestBlockValidity(CValidationState& state, const CChainParams& chainparams,
         return error("%s: Consensus::CheckBlock: %s", __func__, FormatStateMessage(state));
     if (!ContextualCheckBlock(block, state, chainparams.GetConsensus(), pindexPrev))
         return error("%s: Consensus::ContextualCheckBlock: %s", __func__, FormatStateMessage(state));
-    if (!g_chainstate.ConnectBlock(block, state, &indexDummy, viewNew, chainparams, true))
+    if (!g_chainstate.ConnectBlock(block, state, &indexDummy, viewNew, chainparams, NULL, true))
         return false;
     assert(state.IsValid());
 
@@ -4112,7 +4185,7 @@ bool CVerifyDB::VerifyDB(const CChainParams& chainparams, CCoinsView *coinsview,
             CBlock block;
             if (!ReadBlockFromDisk(block, pindex, chainparams.GetConsensus()))
                 return error("VerifyDB(): *** ReadBlockFromDisk failed at %d, hash=%s", pindex->nHeight, pindex->GetBlockHash().ToString());
-            if (!g_chainstate.ConnectBlock(block, state, pindex, coins, chainparams))
+            if (!g_chainstate.ConnectBlock(block, state, pindex, coins, chainparams, NULL))
                 return error("VerifyDB(): *** found unconnectable block at %d, hash=%s (%s)", pindex->nHeight, pindex->GetBlockHash().ToString(), FormatStateMessage(state));
         }
     }
diff --git a/src/wallet/wallet.cpp b/src/wallet/wallet.cpp
index 0562f5633b..d00af6dbf6 100644
--- a/src/wallet/wallet.cpp
+++ b/src/wallet/wallet.cpp
@@ -3028,7 +3028,8 @@ bool CWallet::CreateTransaction(const std::vector<CRecipient>& vecSend, CTransac
     if (gArgs.GetBoolArg("-walletrejectlongchains", DEFAULT_WALLET_REJECT_LONG_CHAINS)) {
         // Lastly, ensure this tx will pass the mempool's chain limits
         LockPoints lp;
-        CTxMemPoolEntry entry(tx, 0, 0, 0, false, 0, lp);
+        std::set<std::pair<uint256, COutPoint>> setPeginsSpent;
+        CTxMemPoolEntry entry(tx, 0, 0, 0, false, 0, lp, setPeginsSpent);
         CTxMemPool::setEntries setAncestors;
         size_t nLimitAncestors = gArgs.GetArg("-limitancestorcount", DEFAULT_ANCESTOR_LIMIT);
         size_t nLimitAncestorSize = gArgs.GetArg("-limitancestorsize", DEFAULT_ANCESTOR_SIZE_LIMIT)*1000;