Draft BIP: DustSweep – policy-only UTXO dust compaction

In recent discussions within the Bitcoin development community, there has been a focus on addressing the issue of "dust-class" UTXOs. These are defined as outputs that are economically irrational to spend under typical fee conditions due to their small value, despite being technically valid. The classification is based on economic viability rather than any relay-policy thresholds, with the break-even spend cost for such outputs rising significantly as transaction fee rates increase. For example, at fee rates around 5–10 sat/vB, outputs below approximately 500–1500 sats become impractical to spend depending on the script type used.

The concept of DustSweep transactions has been introduced as a solution to this problem. These transactions are designed to be opportunistic, aiming to consolidate dust-class UTXOs without competing with fee-paying transactions for block space. It's proposed that DustSweep transactions would only be processed after all available fee-paying transactions have been included in a block, effectively sitting at the bottom of the mempool's priority list. This approach intends to ensure these transactions do not interfere with the normal functioning of the Bitcoin network, especially during periods of sustained congestion where they are expected to idle or expire.

To simplify policy and limit the impact on the network, several constraints would apply to DustSweep transactions. They would be limited to confirmed inputs only, with no unconfirmed ancestors, and Replace-By-Fee (RBF) would be disabled to avoid churn. Additionally, Child-Pays-For-Parent (CPFP) assumptions would not be made, streamlining their treatment by node operators. These measures aim to make DustSweep transactions straightforward to manage and minimize their impact on mempool state tracking and bandwidth usage.

The primary motivation behind introducing DustSweep transactions is not financial gain from recovering small amounts of bitcoin but rather improving long-term UTXO set hygiene. By providing a mechanism for compacting otherwise abandoned outputs, the proposal seeks to prevent unnecessary growth in the UTXO set and reduce resource costs for nodes. This focus on network efficiency over direct economic benefit highlights the community's commitment to maintaining Bitcoin's operational integrity. Furthermore, while not directly related to the DustSweep proposal, there is mention of future work on segregated data lanes to address UTXO growth from metadata-heavy transactions, suggesting ongoing efforts to optimize Bitcoin's scalability and efficiency.