This is my covenant, which you shall keep, between me and you and your offspring after you: Every male among you shall be circumcised.
A covenant is an agreement, a sort of contract between parties. Here, God is making a covenant with Abraham and Abraham's offspring. In this covenant, God promises to be their God, to give Abraham and his descendants the land of Israel, and to make them exceedingly fruitful.
What makes this covenant unique is the sign or symbol of the covenant: circumcision. Circumcision is the removal of the foreskin from the male offspring of Abraham, though Abraham too was circumcised at an old age when this covenant was established.
Circumcision may seem drastic and permanent, but that is the idea. A strong symbol will ensure this covenant is remembered, as it has been.