Draft BIP: DustSweep – policy-only UTXO dust compaction

The DustSweep proposal, crafted by Defenwycke, targets the specific issue of long-term accumulation of uneconomical dust in the UTXO set. It outlines a precise and non-exploitable category of transactions designed for nodes to relay and miners to include, but only during times of low mempool and block space utilization. This initiative is aimed at providing wallets with a reliable method for consolidating dust without introducing potential spam vectors or necessitating consensus alterations.

DustSweep transactions are characterized by several key features, including the exclusive use of "dust-class" UTXOs, adherence to standard scripts such as P2PKH, P2WPKH, and P2TR, and the limitation to exactly one output without any metadata. These transactions must have a minimum of five inputs to ensure a significant reduction in the UTXO set and are subject to size restrictions. They also implement a minimal fee policy of 1 sat per input. To prevent these transactions from competing with the regular fee market, they are stored in a separate, smaller sub-mempool and are only processed under specific conditions regarding mempool capacity and block weight allocation.

The rationale behind DustSweep is to address the lack of a safe and structured approach to reducing dust within the Bitcoin network. The growing UTXO set, inflated by outputs that become impractical to spend under typical fee circumstances, presents a challenge that this policy aims to mitigate. By offering an optional, predictable mechanism for wallet operators to clear dust, DustSweep seeks to improve network efficiency without compromising security or operational standards.

Defenwycke has made available the complete draft of the Bitcoin Improvement Proposal (BIP) along with supporting documentation for public review and feedback on GitHub, which can be accessed here. Feedback is encouraged, especially concerning the policy's details, thresholds, and its alignment with the needs and preferences of node operators and wallet developers. Adjustments to the proposal are open for discussion to find an optimal balance that serves the community's interests.