The units (sats) exchange at equal value that is fungible.

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correct.

sats are fungible.

UTXOS are not.

UXTO can contain any amount of units so why would they be fungible? A 10 bitcoin UTXO is obviously not fungible with 10 sats. Just like a $100 isn’t fungible with a $1. I would never argue differently.

sats/bitcoins are fungible