Draft BIP: DustSweep – policy-only UTXO dust compaction

In a recent discussion within the Bitcoin Development Mailing List, concerns were raised about a new proposal related to the management of transaction fees and the inclusion of certain transactions in blocks by miners. The critique focused on the proposed minimum fee rate of 0.1 satoshis per virtual byte (s/vB) and its implications for different types of inputs, namely P2PKH, P2WPKH, and P2TR inputs, which are essential components of Bitcoin transactions. It was argued that with the current fee structure, the cost for these inputs at the new minimum fee rate is relatively low, making the proposed changes unnecessary and potentially unbeneficial.

The conversation highlighted the costs associated with standard input sizes under this new fee regime, emphasizing how the break-even spend cost for using Bitcoin could rise significantly once fee rates exceed a few satoshis per virtual byte. This scenario would make it irrational for users to spend outputs below certain thresholds, thus questioning the rationality behind abandoning UTXOs (unspent transaction outputs) of "500–1500 sats" when they constitute a considerable portion of their value, even at lower fee rates. The dialogue underscored the inefficiency and complexity of the proposal, suggesting that it offers negligible benefits to senders when compared to the existing system, especially at lower fee rates where the mempool has been observed to clear down to 0.2 s/vB in recent months.

Furthermore, the discussion touched upon the necessity of designing incentives that align with both the creators and consumers of block space if one wishes to encourage the consolidation of UTXOs. The underlying skepticism toward the proposal was rooted in the belief that there might already be financial incentives sufficient to motivate this behavior, implying that any new measure should first assess why current incentives have not led to the desired outcome. This critique suggests a deeper need for understanding the behaviors and motivations of Bitcoin users before implementing changes that could disrupt the established dynamics of transaction inclusion and fee structures within the network.