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Date: Sat, 08 Mar 2025 17:13:56 -0500
From: Light <bitcoin-dev@lightco.in>
To: bitcoindev@googlegroups.com
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Subject: Re: [bitcoindev] Proposal: Unlocking Dust UTXOs as Miner Transaction Fees
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Hi Nighttime,
Several questions come to mind:
1. Why fix the limit at 546 sats? Why not allow any UTXO to be spent this w=
ay?
2. What about "dust" UTXOs owned by scripts rather than keys? e.g. multisig
3. The size of this OP_RETURN output could be a barrier, both technical and=
economic:
Technical: Based on the metadata contained in this output, this may be larg=
er than the current 80-byte OP_RETURN standardness limit. Is that correct? =
If so, does this imply a need to increase this standardness limit, or requi=
re an assumption that the user will find their own way to circumvent this l=
imit? e.g. using Libre Relay
Economic: Depending on the size of this OP_RETURN output and the current ma=
rket fee rate, the value of the dust may still be uneconomical for the mine=
r to claim. For example, if the OP_RETURN output is 100 vB and the current =
fee rate is 6 s/vB then a 546 sat dust output will not be economical for th=
e miner to include in their block.
4. Given the above considerations, I wonder how this proposal is an improve=
ment over the status quo at all. Does this method of spending a UTXO via OP=
_RETURN actually save any onchain bytes relative to "traditional spending"?=
And even if it does result in onchain byte savings in some or all cases, i=
s it really worth all of the effort of a soft fork and wallet updates etc t=
o allow them to become spendable this way if economic realities could make =
them uneconomical to spend anyways should we permanently transition to a pa=
radigm of sufficiently high fee rates?
Regards,
Light
On Sat, Mar 8, 2025, at 1:23 PM, Nighttime Satoshi wrote:
> Dear fellow Bitcoin developers,
>
> I'm excited to share a proposal addressing a long-standing Bitcoin=20
> challenge: economically unviable dust UTXOs.
> As Bitcoin's value and transaction fees increase, more UTXOs become=20
> effectively unspendable because the cost to move them exceeds their=20
> value. This creates a growing dust horizon - small amounts of BTC=20
> permanently stranded from circulation, weakening fungibility and=20
> bloating the UTXO set.
>
> I'm proposing a solution that enables users to voluntarily designate=20
> their dust UTXOs as transaction fees through cryptographic=20
> authorization, allowing miners to claim them directly without requiring=
=20
> traditional spending. This is a win-win-win solution for users=20
> (reclaiming otherwise stranded value), miners (additional fee income),=20
> and the network (reduced UTXO set size).
>
> Key Features: 1. *Entirely Voluntary* - Users must explicitly authorize=
=20
> any dust UTXO transfer with cryptographic signatures proving ownership
> 2. *Implementation as Soft Fork* - Backward-compatible with=20
> non-upgraded nodes
> 3. *Simple Security Model* - Uses familiar signature verification=20
> without exposing private keys
> 4. *Clearly Defined Dust Threshold* - Fixed at 546 satoshis, matching=20
> Bitcoin Core's existing dust limit
> 5. *Race Condition Prevention* - Comprehensive safeguards against=20
> double-spend and miner race conditions
> 6. *Minimal Consensus Impact* - Carefully designed to introduce=20
> minimal complexity to Bitcoin's validation logic
> Economic Benefits: 1. *UTXO Set Cleanup* - Removing millions of dust=20
> UTXOs could significantly reduce the UTXO set size
> 2. *Enhanced Fungibility* - Provides a pathway for stranded satoshis=20
> to rejoin economic circulation
> 3. *Long-term Miner Incentive* - Creates an additional fee source as=20
> block rewards diminish
> 4. *Complementary to Existing Solutions* - Works alongside batching,=20
> consolidation, and Lightning Network
> Technical Implementation:
> The proposal uses a special OP_RETURN output format in transactions to=20
> designate dust UTXOs for miner claiming:
>
> OP_RETURN <DUST_FEE_PREFIX> <dust_utxo_txid> <dust_utxo_vout> <signature>
>
> Miners can claim these UTXOs in their coinbase transaction if and only=20
> if the corresponding designation transaction is included in the same=20
> block.
>
> Historical Context & Contributions:
> It seems that previous discussions on dust UTXOs have considered many=20
> approaches, including forced reclamation. This proposal avoids those=20
> controversies by requiring explicit user authorization while still=20
> providing an economically rational path for dust cleanup.
>
> You can read the full proposal draft here:=20
> https://github.com/satoshinotebook/BIPs/blob/main/unlocking-dust-utxos-as=
-transaction-fees.md
>
> I'd appreciate feedback on:
>
> 1. Technical feasibility of the soft fork implementation
> 2. Security considerations and potential edge cases
> 3. Economic incentive alignment
> 4. User experience concerns for wallet implementations
> Thank you for any feedback! I believe it offers a practical solution to=
=20
> a growing challenge that will only become more significant as Bitcoin=20
> continues to mature and evolve.
>
> With respect,
>
> Nighttime Satoshi
>
> nighttimesatoshi@gmail.com
>
> https://satoshinotebook.com
>
>
> --=20
> You received this message because you are subscribed to the Google=20
> Groups "Bitcoin Development Mailing List" group.
> To unsubscribe from this group and stop receiving emails from it, send=20
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