Draft BIP: DustSweep – policy-only UTXO dust compaction

The discussion centers around a proposed policy aimed at enhancing the efficiency of Bitcoin transactions by focusing on the handling of dust-class Unspent Transaction Outputs (UTXOs). The original proposal suggested that all inputs must be dust-class UTXOs and limited transactions to exactly one output. However, a suggestion was made to modify these requirements to improve the policy's effectiveness and applicability. It was recommended that instead of insisting all inputs be dust-class UTXOs, a minimum threshold of 80% dust-class inputs should be required. Additionally, the constraint on the number of outputs was suggested to be relaxed to allow a maximum of outputs equal to the floor of the number of inputs divided by five, maintaining a maximum output/input ratio of 1/5.

This adjustment aims to facilitate better aggregation of dust outputs into economically significant monetary outputs, thereby optimizing the utility of the Bitcoin network's transaction capacity. Implementing such a policy would not only assist in significantly reducing the size of the UTXO set but also create an incentive mechanism for more efficient use of block space, especially during periods of low demand for block space. The policy is expected to receive support from hashers, as it introduces an additional, though minimal, fee source which benefits those among them who also operate full nodes. This approach underlines a collaborative effort to address the scalability and efficiency challenges faced by the Bitcoin network, highlighting the community's ongoing efforts to refine and enhance its operational frameworks.