Unbreaking testnet4

The discussion begins with a proposal for introducing demurrage into the consensus rules of testnet5, highlighting the failure of previous testnets (testnet3 and testnet4) to render coins worthless, despite their intention. It mentions the introduction of signet as an endeavor to create a more stable testing network but notes the challenges faced due to the requirement for unanimous consent for certain changes, as listed on the Bitcoin Wiki page. These changes include the signing of blocks and increasing the total number of coins beyond 21 million, both of which have implications for testing network functionality and stability.

The conversation then shifts to the problem of "not enough coins for miners" in test networks, which has surprisingly never been an issue in any of the testnets, including testnet3, testnet4, and signet. The discourse suggests that increasing the coin supply would not address the underlying issues and could potentially introduce new problems, such as integer overflows. As an alternative to addressing these challenges, demurrage is proposed as an unexplored option in test networks. This could involve either burning coins or re-assigning them, with burning being identified as the simpler approach for implementation as a soft-fork due to its compatibility with current systems.

Furthermore, the proposal elaborates on the potential benefits of implementing demurrage through coin burning, particularly in terms of maintaining testnet nodes. It posits that automatically invalidating old coins could simplify the Initial Blockchain Download (IBD) process by reducing the amount of data new nodes need to synchronize. This could effectively allow all nodes to operate in pruned mode, only needing to store a fraction of the total blockchain data, specifically the last 2,016 blocks. This would not only limit the storage requirements for each node to approximately 8.064 GB but also prevent the uncontrolled growth of the UTXO set, thus enhancing the efficiency and manageability of testnet infrastructure.