Dust Expiry: Clean the UTXO set from spam

The proposal outlines a method for managing very small, old unspent transaction outputs (UTXOs) on the blockchain to mitigate spam without confiscating these UTXOs. It suggests introducing a rule whereby such UTXOs can be made prunable after a certain time, thereby reducing the burden on the global UTXO set while still preserving the ability of users to spend their UTXOs if necessary. This approach involves keeping a record of the location where the UTXO was created, described using parameters like block height, transaction index, and output index. This information would allow users to prove ownership and spend the UTXO by including a Simplified Payment Verification (SPV) proof in the annex of their spending transaction.

This method notably shifts the responsibility of data storage from the entire network to individual users who own these small, old UTXOs. The suggested format for representing an expired UTXO's location is efficient, requiring less than 8 bytes. Given the lower entropy of a set of such locations, it's possible to compress this data further, achieving even greater efficiency.

Implementing this rule could significantly reduce spam on the blockchain. For instance, it is estimated that more than 4.3 GB out of over 5 GB of spam could be pruned, including all of the bare multisig spam. This represents a considerable improvement in managing blockchain resources and enhances its overall performance by alleviating unnecessary data storage burdens.