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Date: Sun, 13 Feb 2022 09:56:21 +0000
From: yanmaani@cock.li
To: Billy Tetrud <billy.tetrud@gmail.com>, Bitcoin Protocol Discussion
 <bitcoin-dev@lists.linuxfoundation.org>
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Message-ID: <021d90632551c45fa7093d503f1bd793@cock.li>
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Subject: Re: [bitcoin-dev] A suggestion to periodically destroy (or remove
 to secondary storage for Archiving reasons) dust, Non-standard UTXOs,
 and also detected burn
Precedence: list

On 2022-02-07 14:34, Billy Tetrud via bitcoin-dev wrote:
> I do think that UTXO set size is something that will need to be
> addressed at some point. I liked the idea of utreexo or some other
> accumulator as the ultimate solution to this problem.

What about using economic incentives to disincentivize the creation of 
new UTXOs? Currently, the fee is only charged per byte of space. What if 
you instead charged a fee of (bytes*byte_weight + 
net_utxos*utxo_weight)? For example, if utxo_weight=500, then a 
transaction that creates 2 new UTXOs would cost as if it were 1 KB in 
size. And a transaction that consolidated 2 UTXOs into one might even 
get a negative transaction fee (rebate).

Technologically, you'd implement this by lowering the block size cap by 
max(0, net_utxos_created*utxo_weight). That would be a soft fork, if 
maybe a contentious one. It's probably also a good idea to limit it at 
0, separate from consensus issues, because it means you're not 
guaranteed to get back whatever you put into it.