Non-confiscatory Transaction Weight Limit

This initiative particularly focuses on BitVM transactions that exceed the standard 100 kvB weight limit, pointing towards an evolving landscape in Bitcoin transaction standards. The current rule, aimed at limiting quadratic hashing impacts and facilitating the construction of optimal block templates, aligns with the broader goals of improving network efficiency and reducing reliance on centralized template providers.

The Consensus Cleanup proposal already seeks to address the issue of quadratic hashing in pre-SegWit inputs, underscoring the community's efforts towards consensus-driven improvements. Nonetheless, there is a proposition for a modified rule that allows a single non-coinbase transaction weighing more than 400,000 WU to be included in a block alongside the coinbase transaction. This compromise aims to preserve the utility of oversized transactions for significant protocols without complicating the creation of optimal block templates. However, this approach raises concerns about Miner Extractable Value (MEV) and the ability of miners to add more outputs to the coinbase transaction, potentially disadvantaging smaller miners and affecting decentralized payout schemes.

The debate around oversized transactions touches on the core of Bitcoin’s future, especially considering the potential for such transactions to necessitate centralized template providers to maintain miner profitability, a scenario already observed in Ethereum as noted by MEV Watch. The discussion invites further ideas on balancing the need for oversized transactions with the integrity and decentralization of the blockchain. The overarching sentiment suggests a cautious approach towards integrating consensus checks against oversized transactions to prevent undermining the network's foundational principles while accommodating evolutionary advancements.