Proposal: Limit ScriptPubKey length, with one exception

The proposal being discussed introduces a novel approach to managing the ScriptPubKey length in UTXO transactions within a blockchain network. It suggests setting a limit of 260 bytes on the ScriptPubKey length for new UTXOs, with an exception applied to transactions that occur in blocks divisible by 256 without remainder. This proposed limitation would be enforced through a soft fork as a consensus rule within the network.

The rationale behind limiting the ScriptPubKey length is tied to encoding efficiencies and overhead minimization. Currently, the highest ScriptPubKey length encoded as a single byte is 252, making it the optimal size for chunking data with minimal overhead. By establishing a cap at 260 bytes, this scheme aims to include all standard scripts while maintaining a low overhead footprint, which consists of 8 bytes for the amount, 1 byte for the ScriptPubKey length, and potentially an additional byte for the OP_RETURN opcode.

The exception for every 256th block is designed to offer flexibility and mitigate the risk of data confiscation, a concern previously raised by @Rob1Ham in his suggestion of a 520-byte limit. Although the 260-byte threshold is presented as a preliminary figure, it is intended to encompass standard scripts effectively. Feedback, particularly regarding the block height exemption, is sought to refine and possibly implement this proposal in future network upgrades.