Dust Expiry: Clean the UTXO set from spam

One central concern is the UTXO set's rapid expansion, largely fueled by spam activities that contribute to its bloat, making it a pressing issue for network efficiency and scalability. The size of the UTXO set has seen significant growth, doubling from 4.6 GB to 11 GB since 2023 due to various spam attacks, including inscription spam, BRC-20 token scams, and wash-trading. This expansion not only strains the network but also underscores the permanence of UTXO spam, which, unlike other forms of spam, cannot be pruned from the system.

In response to these challenges, a proposal for an age-based expiration rule for dust outputs has been put forward, aiming to mitigate the clutter caused by spam within the UTXO set. This soft-fork proposition suggests that very small and old outputs become unspendable after reaching a certain age threshold, allowing for their removal from the UTXO set and thus reducing its overall size. This approach seeks to address the inefficiencies posed by the UTXO set's growth without compromising the fundamental principles of blockchain technology, such as user autonomy and fairness.

Furthermore, research on the UTXO set reveals that approximately 41.65% of it consists of 'dust' - small bitcoin amounts considered economically nonviable to spend due to transaction fees exceeding the transfer amount. This finding is pivotal as it quantitatively illustrates the scale of potentially irrelevant outputs in circulation, prompting discussions on optimizing network performance while maintaining inclusivity and fairness for all participants. The dust limits established by Bitcoin’s default core policy for various script types play a crucial role in this context, influencing potential future adjustments in handling dust within the protocol.

The proposal's introduction of a mechanism for managing dust outputs through an age-based expiration represents a strategic attempt to optimize the UTXO set's efficiency. By targeting very small and very old outputs for expiration, the strategy aims to clean up the UTXO set without engaging in what could be perceived as confiscatory practices, thereby aligning with ethical considerations and governance principles within the blockchain ecosystem. This nuanced approach highlights the complex balance between leveraging analytical insights for network optimization and respecting participant rights.

Overall, the dialogue encapsulates the ongoing exploration and debate within the blockchain community regarding scalable and efficient validation methods, with the UTXO set's management at its core. It reflects a concerted effort to address inherent limitations in current technologies while ensuring the security, reliability, and integrity of user assets in the face of expanding network demands.