Liquidity provider utxo management

Posted by remyers

May 10, 2024/15:18 UTC

A new Python simulation script, simulate-funding-v2.py, has been developed to offer a faster alternative to the bitcoind-based simulation.py. This development emerges from a fork of achow101's coin-selection-simulation project. The primary advantage of using simulate-funding-v2.py lies in its efficiency; it bypasses the complexities of bitcoind's coin selection algorithms by opting for the best single input for each funding attempt within the simulation.

The objective behind creating this simplified version is to explore and identify a heuristic capable of minimizing total fees across simulations. This involves examining estimates of both the feerate probability distribution and the funding request probability distribution. The pursuit aims at achieving cost-effectiveness in transactions by leveraging a more straightforward, yet effective, approach towards coin selection. The results from these streamlined simulations are pending and will be shared upon thorough validation against outcomes derived from the full bitcoind simulation. This endeavor signifies a step towards optimizing transaction fee expenditures through methodical experimentation and analysis.

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