Many small UTXOs are BAD!
I’ve heard it for awhile, but need to learn more about the specifics of why and steps to counter. Seems to be an input data size thing.
Researching now, but any resources that you may have to point me in the right direction would be appreciated.
Thanks #plebchain 🤙🫂
Haven't consolidated UTXO's for 6 years, just continued DCAin.
nostr:npub1tq7z72r2g859ucwfmr4qne8ft6v2z38c2qlqhmq098q4qpvv5m0svhxzxp has written some great articles on this very topic.
Check out the latest:
Thank you. 🤙🤜
The article pertaining to small UTXOs is actually this one:
TLDR is that it will make your future fee situation worse
I don’t have resources but it seems like you got the gist of it. Having tons of inputs means more data per tx which means much higher miner fees in the age of ordinooooools
Consolidate now or soon, while it’s only moderately bad, imo
Sounds good thanks
The most succint process flow is this:
More UTXOs -> more strings of data to be included to block -> more bytes in your TX data -> higher number being multiplied by more the (sats/byte) * (number of bytes in TX data) fee calculation
Followup question; what constitutes a small UTXO? 100K sats? 1M sats?
What size of on-chain transactions do we expect to be making in the future, when on-chain activity is theoretically so robust that fee affordability is a serious/ongoing concern?
100K sats for a car? 1M sats for a house? How long until the average hodler begins to spend from the cold stack?
Anything less than 100k will be almost certainly unspendable L1. I would keep all UTXOs 500k+
The average hodler will probably be spending out of cold storage when 1BTC = 1 median home, but it’s important to remember that this is cyclical. Last cycle, lots of hodlers were spending when 1 BTC = 1 nice car, and the threshold for spending will always increase overtime.
Put into other words, you should always be able to trade 1 Bitcoin for more real goods over time.
I really like the other replies so far. For what it’s worth, I’ve also read that batching your UTXOs to reduce the number may have the unintended consequence of making your on-chain privacy worse. This would be especially true if your UTXOs were each acquired from different sources.
Thanks for input! 🤜
