Disposing of "dust attack" UTXOs

This strategy leverages the hope that these tiny transactions will be combined with larger ones, inadvertently linking them together. A detailed discussion on this topic is available at BitcoinOps, and further insights into output sizes within the UTXO set can be found at Mempool Research. To counteract these risks, modern wallet designs include features that lock dust UTXOs to prevent their use, though this solution is not without its problems such as increased mempool size and potential future restoration complications.

A proposed strategy to address dust UTXOs involves creating transactions that spend these amounts entirely on transaction fees, including an OP_RETURN output. With the minimum relay fee rate now reduced to 0.1 satoshis per virtual byte, disposing of dust UTXOs becomes more feasible. The structure of these transactions varies depending on the address type, with specific considerations for P2WPKH, P2SH 2-of-3 multisig, and P2WSH 2-of-3 multisig setups. Tools to support detailed calculations for these transactions are provided by BitcoinOps Tools.

However, implementing this feature in wallets introduces several challenges and risks, such as potential user fingerprinting if only a few wallets adopt it, correlating risks of broadcasting multiple dust transactions simultaneously, rebroadcasting needs if fee rates increase, and complications for multisig and hardware signing device users. Feedback from developers is sought to refine this approach effectively.

Additionally, the importance of privacy when publishing dust spends was highlighted, emphasizing caution to avoid broadcasting them from identifiable IPs, especially simultaneously. Using a full-node for broadcasting offers no less privacy than sending any other transaction, but concerns about spy nodes remain. A tool named ddust has been developed to facilitate the creation of de-dusting transactions, offering options for broadcasting via a local Bitcoin node and combining transactions for efficiency. Corrections to the minimum relay size and suggestions for sighash and OP_RETURN data have led to revisions in the ddust CLI app, demonstrating how to create and potentially combine de-dusting transactions for enhanced fee efficiency.