Author: Peter Todd 2015-05-25 21:26:38
Published on: 2015-05-25T21:26:38+00:00
The problem with wallets having lots of tiny UTXOs is that it causes fees to be huge when making payments. Wallets could do a better job with defragmentation, but nobody is working on it due to manpower issues. One possible solution proposed by a wallet developer is to make free transactions more reliable so that wallets can submit free transactions to consolidate UTXOs at night or during periods of low demand, and fit them into available block space. However, this can cause confusion as to why outputs are unavailable until the transactions confirm, and it's inefficient to use larger UTXOs for small payments. The solution to this problem is replace-by-fee, which allows for double-spending pending defragmentation transactions if they are still unconfirmed when needed.
Updated on: 2023-06-09T20:28:02.326291+00:00