He agrees with Andrew's point that using a prefix tree would require more space compared to using just the block height and an index for the UTXO in the block. To address this issue, they have removed the vout from the encoding by implementing a flattened index over all the transactions and their outputs per block, which aligns with Fabian's suggestion.Andrew has provided accurate numbers regarding the required bits for the encoding. The block height requires 19 bits on average, while the flattened index requires 12 bits. However, Tom suggests that they can potentially reduce the number of bits needed for the block height by using a bit to indicate whether the block height is over a certain threshold, such as 500000.It is important to note that the email does not provide any specific links or additional context beyond the discussion on encoding and reducing the required bits.