Stranded UTXO and dust horizon due to potentially high fees in the future

[unrealisticexpectations]

I have a few questions / shower though regarding what I call stranded UTXO and the dust horizon problem

Currently fees on the bitcoin network are relatively low and you can almost always get away with 1sat/vB as long as you are patient, but this might not be always the case. With increasing adoption and the reduction of the block reward we might come to a point were fees would increase dramatically since many users would be competing with a relatively scarce block space.

This would make the mining fee potentially skyrocket and in turn certain UTXO might not be worth spending since they would cost more in fees than there value. This could potentially make them "unspendable" forever rendering them defacto worthless.

Currently this is already the case with what we call dust. Small left over in wallet that cannot be spent without costing you more. The current value is at around 250 satoshi, anything lower is already "stranded". This is what I call the Bitcoin Dust Horizon, a potentially ever expending value at which moving an UTXO cost more than the value it represents.

This could have some interesting consequences:

• Some lightning channel could become permanently open since closing them would be impossible due to high fees
• Scarcity of bitcoin would increase since it would effectively remove UTXO from the market
• Certain people could loose portion of their hard stacked BTC.
• This is even more insidious since you might have in your wallet 2 btc, but behind the scene it might be 565652 small UTXO, thus rendering portions of your stack worthless.
• Things like opendime would be partially immune in the sense you can still exchange it but redeeming it would be pointless
• People who DCA a few $ and withdraw often to their cold storage could be particularly affected by this

Of course predicting the future is hard, but I’m curious to know if its something you consider when you store coin for long term and if anything has been wrote about this topic

[1714957040]

1714957040

[franky1]

fee's would move from 1sat/byte to 1sat per 10byte (10x cheaper) then 1sat/100byte (100x cheaper) then 1 sat per kb (100x cheaper)

blockspace is not technically hindered due to any laws of physics complications or any natural problem of ability.. its hindered due to developer politics to want people to use other networks and stop using bitcoin regularly.

bitcoin on the mainnet.. yep the actual bitcoin network can scale.
take ethereum, its blockchain is younger but is already 2.5x more in size than bitcoin, and they are not crying about scarce blockspace or saying that ethereum is useless.

ethereum did not get scared of the propaganda of the blocksize debate which is why they are doing alot more  utility than bitcoin has done in the last 7 years.

..
bitcoin should not be hindering itself by stopping people moving $3 amounts of value (a days wage in 2billion peoples lives). it should not be trying to push for higher fee's to compensate miners. (again vetoing out utility of atleast 2 billion people)
instead it should allow more transactions so that if the miners need fee's to be 10x. then having 10x more transactions means they get their 10x without it individually costing users any more.

yep
2,000 tx * $1 becoming 2,000tx *$10
is the same as
2,000 tx * $1 becoming 20,000tx *$1

ethereum has grown by 142gb a year
bitcoin is hindered at ~ 68GB a year(~1.3mb a block)

we are no longer in the days of dial-up where it took 40 minutes to download a 3minute MP3
we are in the days of 50mb+ fibre/5g where it takes seconds to download an MP3

if people can download a 4mb mp3 in seconds then the ~1.3mb blocks are foolishly being restricted

people do online gaming while live streaming it to twitch and also in group VOIP chatting to other gamers all at the same time. using far far far far more bandwidth than what bitcoin would use even at 10x.
and no one is calling out that online gaming cant function.

bitcoin can scale. just the developer politics doesnt want it to.
they want high fee's they want hindered utility, to push people away from using bitcoin regularly

utxo dust is not hindered by anything physics prevents in the real world. utxo dust is only hindered by developer politics to choose not to set dust free

[o_e_l_e_o]

With increasing adoption and the reduction of the block reward we might come to a point were fees would increase dramatically since many users would be competing with a relatively scarce block space.

Scaling solutions such as Lightning should hopefully keep much of this demand away from the base layer.

This would make the mining fee potentially skyrocket and in turn certain UTXO might not be worth spending since they would cost more in fees than there value. This could potentially make them "unspendable" forever rendering them defacto worthless.

There are already millions of such UTXOs.

The current value is at around 250 satoshi, anything lower is already "stranded".

546 sats for legacy, 294 sats for segwit: https://github.com/bitcoin/bitcoin/blob/623745ca74cf3f54b474dac106f5802b7929503f/src/policy/policy.cpp#L16

In terms of the consequences - people having been losing bitcoin in a variety of ways for years. In the words of Satoshi, "Think of it as a donation to everyone". It is the responsibility of manage their own coins, which includes not generating thousands of small UTXOs in their wallets, and consolidating multiple small UTXOs in to one larger one when the fees are favorable. It's not like suddenly fees are going to jump to 100 sat/vbyte and never come down again. If we ever reach a time when 1 sat/vbyte is never enough, it will be a very slow and gradual process over a period of years.

[franky1]

Scaling solutions such as (facepalm)

oh look.. an altnetter trying to advertise that people should use other networks

scaling BITCOIN is not done by pushing people to stop using bitcoin..

the thing is if bitcoin network does not set the UTXO dust free.. how the friggen hell do people expect to lock that dust up into a smart contract lock to then go use the other network(for those shamefully falling down the rabbit whole of exiting bitcoin)
and how the hell do you expect them to close session that lock to actually spend their dust once they want to exit the altnet and use bitcoin(climb out the rabbit hole)

i know you love your altnet. but if you want to restrict people transacting on bitcoin. then you are also restricting the offramp into your altnet.. THINK ABOUT THAT

heres an analogy for you.
if you want people to ride a bicycle on bike paths, instead of using a car on the road. you and your chums want to make all the traffic lights stay on red to stop people using cars/trucks.. but what you are not realising is if there are no ways to move cars or trucks. how the hell do you think that retailers and people are going to get their bikes delivered to them.. magic?
how the hel do you think people are going to be able to dispose of their bicycles to then buy new bikes?
if you stop the delivery and garbage trucks. you stop bicycle usage and leave those that already have bikes, stuck with old rusted bikes they can no longer ride

i know you want to make it too expensive to use bitcoin, to advertise your alternative network. but by doing so your making it too expensive to even enter/exit your altnet. your shooting yourself in the foot with that mindset.

look beyond your altnet blind scripts of advertising and think about bitcoin(the bitcoin network) utility of moving UTXO

this topic is about moving bitcoin UTXO. about using BITCOIN UTXO.. its not a topic to push people to stop using bitcoin

[buwaytress]

Nice discussion.

Several years ago, when it was still possible to submit txs to Viabtc and antpool (without payment or fee restrictions or tx size maximums that they now have), I took the opportunity to consolidate all the dust wallets I had. Even had someone on this forum -- no need to mention names since they DM'd me to help -- wanted to do the same. He ended up not doing it at all in the end as it would have taken up a lot of space -- he felt that miners also didn't like to fill blocks up then just to consolidate dust. Not to mention wallet would begin to freeze up (don't know if it still does) when trying to select hundreds of inputs.

There is a service still active today (former faucet) that I recall reading not too long ago already has all these tens of thousands of legacy addresses with stranded sats.

Haven't thought about it since but this thread made me think again about it -- what if, simply for purposes of consolidating dust (addresses with barely enough or not even enough to cover minimum sat/byte fees), there would be a consideration to temporarily or exclusively allow below 1 sat fee to at least recover some of these coins otherwise lost?

Or, rather, the more important question for me is: was this always part of the supply mechanism? That stranded dust would be part of circulating supply attrition?

[o_e_l_e_o]

what if, simply for purposes of consolidating dust (addresses with barely enough or not even enough to cover minimum sat/byte fees), there would be a consideration to temporarily or exclusively allow below 1 sat fee to at least recover some of these coins otherwise lost?

There is nothing stopping a miner from including a transaction with fees below 1 sat/vbyte or indeed with no fee at all, if you can convince one to do so. The problem is of course that there is no incentive for them to do so, since they can instead fill their block with higher fee paying transactions and therefore make themselves more profit in the process.

Or, rather, the more important question for me is: was this always part of the supply mechanism? That stranded dust would be part of circulating supply attrition?

The first limit on small outputs was that any output smaller than 0.01 BTC would incur a fee of 0.01 BTC, which obviously disincentivizes users to create dust outputs, but doesn't prevent them from doing so. The current protocol is somewhat different, in that most nodes now won't accept transactions which create dust outputs at all.

[pooya87]

There is nothing stopping a miner from including a transaction with fees below 1 sat/vbyte or indeed with no fee at all, if you can convince one to do so. The problem is of course that there is no incentive for them to do so, since they can instead fill their block with higher fee paying transactions and therefore make themselves more profit in the process.

That's a bit off-topic but has anyone done any research into the purpose of transactions with 0 fees lately? They seem to be a common thing in each block. Of course some of them are obvious since they are spending coinbase outputs directly so it must be a mining pool consolidating UTXOs and paying their miners but that's not all of them.
https://blockchair.com/bitcoin/transactions?s=time(desc)&q=fee(0),is_coinbase(false)#f=time,fee,block_id,hash,is_coinbase

[buwaytress]

^^ Thanks for more information and yes, I think the discouragement has worked in general, we don't even see anymore of those dust sprays (that I even got around 2017) from people just spreading their taint randomly but I guess I was wondering about legacy services especially, when it was fairly common to get 1 bits from people here and there. I know I certainly did but consolidated in good time.

And yes, wonder what those 0-fee txs are doing. They'd have to also be large txs (data wise) to indicate dust consolidation. Might even be a pretty cool "community service" for a miner to do, perhaps at some point as a collaboration, to offer free consolidation, perhaps in low network periods, which there always will be -- or perhaps much farther down the line when layer 2s have become the norm. I imagine all that recoverable dust could end up being significant at a user level anyway.

(My Sunday dribbling thoughts anyway, I might DM that guy and see if he still has his issues).

[unrealisticexpectations]

Hi

this topic is about moving bitcoin UTXO. about using BITCOIN UTXO.. its not a topic to push people to stop using bitcoin

But to me using Lightning does not stop people using bitcoin it enables more users to use Bitcoin and avoid potentially the pitfalls of small UTXO.

Haven't thought about it since but this thread made me think again about it -- what if, simply for purposes of consolidating dust (addresses with barely enough or not even enough to cover minimum sat/byte fees), there would be a consideration to temporarily or exclusively allow below 1 sat fee to at least recover some of these coins otherwise lost?

That sounds like cool idea and it definitely could be done. I also thought about a mining pool that randomly include some small UTXO to help people consolidate them in a lottery type service.

Or, rather, the more important question for me is: was this always part of the supply mechanism? That stranded dust would be part of circulating supply attrition?

Maybe, my goal with this discussion is to at least have a debate / awareness. It would suck if someone gets locked out of their bitcoin because of the dust horizon, especially because most wallets will hide this from you.

That's a bit off-topic but has anyone done any research into the purpose of transactions with 0 fees lately? They seem to be a common thing in each block. Of course some of them are obvious since they are spending coinbase outputs directly so it must be a mining pool consolidating UTXOs and paying their miners but that's not all of them.

AFAIK there is nothing that prevent a miner to include 0 fee transactions. Its just that regular users cannot do it because most nodes will not relay them for anti spam purpose.

to offer free consolidation, perhaps in low network periods, which there always will be

This is unsure, I mean I wish it would be true but I think block space could become really scarce as more people push transactions and some would be willing to pay way higher than now just to get included.

To me what will happens is most of the transactions will be offloaded to layer 2 solutions like lightning or sidechain that relies on the strong base layer. Thus reducing the need for blockspace.

[o_e_l_e_o]

But to me using Lightning does not stop people using bitcoin it enables more users to use Bitcoin and avoid potentially the pitfalls of small UTXO.

franky1 is a big block shill with a personal vendetta against Lightning. He has been banned from the technical boards for repeatedly spreading lies about Lightning. You can ignore him like most other users do.


There was an old service from Peter Todd which I have previously spoken about here called Dust-B-Gone which would have taken everyone's dust and donated it all to miners. It doesn't run anymore, but it would solve the problem of dust being permanently unspent. It obviously doesn't return the value to the original owner, though.

[franky1]

when it comes to hard data.. actual technical stuff..
.. there is absolutely no technical difference between:
a raw TX  when it comes to the value being moved.
or even a UTXO in a UTXO set when it comes to the value being moved

yep i said it.. whether you are spending 100btc or 0.00000100btc. both are technically the same..
they both appears as 8bytes in length no matter the 'decimal' value

yep. look at raw tx data of a tx
no matter what the 'decimal' value being spent is.. in raw data format of binary is always represented as 8bytes
meaning pretending the spends of value below a certain limit is saving a few bytes per transaction/block. is false.

the real issue of dust prevention was to prevent someone splitting 0.001btc over 1000times in 1 transaction to 'spam' up a block with loads of transactions of bloated size per transaction

a simpler way to prevent people splitting 0.001btc into 0.00000100 is by preventing transactions from allowing 1000+ inputs/outputs
because the real problem is not that loads of 'dust' of 100sat(value) harms anything. its that spamming lots of inputs/outputs harms utility of other peoples ability to have room to fit their transactions into limited space of a block

by simply having input/output limits. and also sigop limits will prevent people making bloated transactions

EG the raw TX format allows 4 bytes designated for how many inputs or outputs a transaction could have.
4 bytes translated to integer is 4,294,967,296
yes there is no possible way to fit in 4,294,967,296 inputs/outputs due to other limitations like the 20k txsigops limit on inputs and the blocksize limit on transaction sizes over all.
(meaning although 4billion inputs/outputs is not possible but more then 1000inputs/outputs are possible)

but even having 2 bytes (65k) is overkill
transactions should not be allowed to have 20,000 sigops and a multitude of inputs/outputs that allow atleast just 5  transactions to fill a block. or allow someone to split an input into extreme amount of outputs so easily via having thousands of outputs in a single transaction.

no-one should be able to make a transaction that has any more then say 265 inputs and 256 outputs, that way it gives fair chance to other people to have blockspace(tx capacity) to have their tx included aswell, rather than the current possibility whereby 5 transactions can fill a block and not be capable of allowing more should someone try to spam a block.


so rather then 'price out' a quarter of the world population from using bitcoin to do normal day stuff with their hourly wage. by doing silly things like raising the transaction fee and having a dust limit so people cant spend value..

instead they should find better solutions to prevent people making spammy bloated transactions(the initial technical reason for the dust limit before it was meandered into dev politics of pricing out the unbanked from using bitcoin)

..
as for those trying desperately to use this BITCOIN NETWORK topic to advertise their altnet as the thing people should use instead for small value amounts
if everyone was to just lock up their UTXO and never intend to spend it, because they are playing with zero-confirm promises on another network.. those UTXO's themselves become the wall that no one wants to see. because people know those locked funds wont move.

so if this topic is about how to be able to move UTXO.. please dont advertise a new altnet that requires locking up UTXO from moving
if its about reducing the amount of UTXO by preventing silly users from even creating such small amounts. .. there are many ways to solve this without locking up/locking out people from being able to spend any value they please on the bitcoin network. (within reason of fair use and not for bloaty spam reasons)
..
anyways. i still laugh at the altnet advert.. one guy says he cant move 100sat UTXO.. and another guy says 'well come use it on another network'.. not realising if you cant move the 100sat UTXO, then you cant move it into the special format tx needed for the lock for the other network.. thus the other network is not the solution to the problem
.. and again .. locking up even more UTXO's to become useless on the bitcoin network and unmovable for lengthy periods of time is not the solution either. especially when those locks are only designed to push users into stop using bitcoin, and to use another network entirely