Removing the Dust Limit

Summary:

Antoine, a contributor to the Lightning Network, expressed his conservative stance on increasing the standard dust limit in any way. He believes that doing so would lower funds safety and introduce a trust vector in the reliability of peers. While LN node operators might be willing to compensate for this trust vector by relying on side-trust models such as PKI or API tokens, Antoine thinks that any authoritative setting of the dust limit presents the risk of becoming ill-adjusted w.r.t to market realities after a few months or years. He believes that this would constrain the design space of newer fee schemes. Furthermore, Antoine believes that increasing the dust limit on the base-layer would severely damage the propagation of any LN transaction where a commitment transaction is built with less than 20 sat/vb outputs. He believes that smarter engineering such as utreexo on the base-layer side or multi-party shared-utxo or compressed colored coins/authentication smart contracts on the upper layers could solve the long-term tension between L2 nodes and full-nodes operators about the UTXO set growth. Jeremy, another contributor to the Lightning Network, suggested removing the dust limit from Bitcoin. He provided five reasons for his suggestion. First, it's not their business what outputs people want to create. Second, dust outputs can be used in various authentication/delegation smart contracts. Third, dust-sized HTLCs in lightning force channels to operate in a semi-trusted mode which has regulatory implications. Fourth, thinly divisible colored coin protocols might make use of sats as value markers for transactions. Finally, if they ever implement confidential transactions, they cannot prevent it without compromising privacy/allowed transfers. However, Antoine thinks that the status quo is good enough for now, and he believes that they would be better off learning from another development cycle before tweaking the dust limit in any sense.

Updated on: 2023-06-15T00:45:19.566488+00:00