[Bitcoin-development] A suggestion for reducing the size of the UTXO database

Peter Todd pete at petertodd.org
Mon May 25 21:26:38 UTC 2015

On Mon, May 25, 2015 at 08:44:18PM +0200, Mike Hearn wrote:
> Wallets are incentivised to do a better job with defragmentation already,
> as if you have lots of tiny UTXOs then your fees end up being huge when
> trying to make a payment.
> The reason they largely don't is just one of manpower. Nobody is working on
> it.
> As a wallet developer myself, one way I'd like to see this issue be fixed
> by making free transactions more reliable. Then wallets can submit free
> transactions to the network to consolidate UTXOs together, e.g. at night
> when the user is sleeping. They would then fit into whatever space is
> available in the block during periods of low demand, like on Sunday.

This can cause problems as until those transactions confirm, even more
of the user's outputs are unavailable for spending, causing confusion as
to why they can't send their full balance. It's also inefficient, as in
the case where the user does try to send a small payment that could be
satisfied by one or more of these small UTXO's, the wallet has to use a
larger UTXO.

With replace-by-fee however this problem goes away, as you can simply
double-spend the pending defragmentation transactions instead if they
are still unconfirmed when you need to use them.

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