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An agreement or set of promises made between two parties. When forming a covenant in ancient days, two parties gathered animals, cut each into two parts, and then placed them on the ground so their blood flowed into one stream. Each party walked through the blood, symbolizing that they would pay with their life if they broke the terms of the covenant.
God made his covenant with Abram in this familiar way. But instead of making Abram walk the blood path, God, in the form of a blazing torch, walked through the path for him. Knowing Abram couldn't keep his end of the covenant, God's actions effectively said, "If either you or I break this covenant, I will pay for it with my own blood" (Gen. 15). Jesus fulfills this covenant promise.