Published on: 2021-04-21T04:59:56+00:00
In a conversation between Prayank and Yanmaani, it is mentioned that UTXO consolidation is already incentivized. When the fee rates are low, consolidating can save money and reduce the size of the UTXO set for Bitcoin full node operators. However, there are privacy concerns regarding post coinjoin. Prayank expresses uncertainty about Yanmaani's proposal, particularly regarding the part about fees decreasing due to smaller blocks. They believe that fees should actually increase if such blocks are regularly mined and predictable.To address the unconstrained growth of Bitcoin's UTXO set, a suggestion is made to add a block weight penalty for UTXO creation and a bonus for UTXO destruction. The net change in UTXOs within each block would be calculated to determine the weight limit, which would be reduced by the penalty. For example, if the penalty is 10 vB/UTXO, a block with a net change of +256 would be 10 * 256 = 2560 vB smaller. This reduction in size could potentially decrease transaction fees by 0.00384000 BTC ($230 at current prices). Alternatively, the penalty could be in the form of coins, requiring miners to fail to claim/burn an equivalent amount of subsidy.It is important to note that the weight limit or block reward cannot be increased. Therefore, three possible solutions have been proposed. The first option suggests allowing any excess weight to be wasted, meaning miners would only use consolidated UTXOs to offset new ones. The second option involves slightly decreasing the weight limit by 1%, giving miners an incentive to consolidate UTXOs up to that limit. The third option proposes increasing the weight limit, but only if miners consolidate enough UTXOs. However, this would make it more difficult for low-fee transactions to be confirmed, and miners might create dust UTXOs to destroy on blocks with higher fees, thereby freeing up capacity.This proposal raises questions about whether it has been discussed before and invites thoughts on the matter.
Updated on: 2023-08-02T03:38:55.546110+00:00