Disposing of "dust attack" UTXOs

The recent discussions among programmers have led to a consensus on enhancing Bitcoin transaction processes. The adoption of SIGHASH_NONE|SIGHASH_ANYONECANPAY has been agreed upon, which facilitates the relaying of every dust input as a separate transaction. This strategy allows miners to perform local aggregation, thus potentially improving efficiency and security in transaction handling.

A significant point raised addresses the issue of Denial of Service (DoS) vulnerabilities associated with current batching practices at the relay level. By implementing a “single input, single output” transaction pattern, the system can circumvent these risks. This method negates the need for relying on standard minimum fee rates, offering a more robust solution against DoS attacks that exploit batching weaknesses.

Furthermore, to maintain the integrity of relay-level batching without causing an exponential increase in complexity, an append-only rule is suggested. Under this rule, a batched dust transaction may only be replaced by another transaction that includes all previous inputs plus any additional ones, with the inputs arranged in a deterministic order. This approach ensures that the space for replacements remains linear, significantly simplifying the progression from one input to multiple inputs. Despite these adjustments, the cleaner method involving single-input transactions relayed directly to miners for aggregation is still considered superior for its simplicity and directness.