[BUG]: spammers get Bitcoin blockspace at discounted price. Let's fix it

Blockspace price for data of a simple transaction is higher than the one for data of other (“complex”) transactions, e.g.

3=616 weight / 205 bytes aabbcce67f2aa71932f789cac5468d39e3d2224d8bebb7ca2c3bf8c41d567cdd

vs

1.49=1140 weight / 767 bytes 1c35521798dde4d1621e9aa5a3bacac03100fca40b6fb99be546ec50c1bcbd4a.

As a result, there are incentives distorted and critical inefficiencies/vulnerabilities (e.g. misallocation of block space, blockspace value destruction, disincentivised simple transaction, centralization around complex transactions composers).

Blockspace price shouldn’t be higher for a simple transaction (price discrimination against simple txs) Price of blockspace should be the same for any data (1 byte = 1 byte, irrespectively of location inside or outside of witness), e.g. 205/205 bytes in the example above.

Perhaps, the solution (the same price, “weight” of any byte of data in a transaction) could be introduced as part of the next version of Segwit transactions.

Do you agree?

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Your analysis disregards that various parts of transactions do not have the same resource footprint in our system. I would suggest that you further explore the reasoning that led to the current state of affairs if you wish to convincingly motivate an intervention.

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if you want to do it without screwing over the normal users of bitcoin, and only make disproportionate use of witness space less competitive:

WUtx = 4·size(tx_data|segwit_data) - 3·min(3·size(tx_data), size(segwit_data))

however most of the spam is brc-20 and that already would not be significantly affected. in the future alternative assets likely will be either using runes or rgb. they can get a lot more efficient with block space. you won’t likely achieve anything with this approach.

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I haven’t found evidence of validity of the “reasoning that led to the current state of affairs”. To the contrary:

  1. the ongoing (and a year long already) spam mania showed that people were led “to use the witness space to store general purpose data on the block chain, or adversarial miners may fill excess space with random junk to defeat fast relay schemes that rely on similar mempools” (SegWit Resources, “Why a discount factor of 4? Why not 2 or 8?”).
  2. Allegedly, another reason was to increase capacity (to 4MB “in a pathological case when you have a single transaction” - Pieter Wuille) and so increase the number of transactions which isn’t achieved. The transactions are outcrowded by spam.
  3. -50% discount in transaction fee due to the use of the cheaper space for witness data” is not achieved. As a matter of fact, fees are at all time high.
  4. UTXO set grows despite fewer simple (not spam) transactions,
  5. Consolidation incentive is not effective as many small UTXOs are stuck due to high fees (so-called “unspedendable dust” caused by SegWit mispricing).

Does the analysis address your concern, perhaps?

Can I ask you to clarify your stance on whether “Blockspace price shouldn’t be higher for a simple transaction (price discrimination against simple txs)”, please?

i was talking about messing with the witness discount not achieving anything when most of the truly fee competitive spam is brc-20 like s***coin protocols. they already have a fairly dense on-chain footprint and they certainly can get more compressed. which means they can get even more competitive in bidding for block space in their own hype cycle.

high fees will make users of bitcoin generally miserable, but also hardly can be avoided if such a bullish external demand for the same blockspace is present. or in general long term at some significant level of adoption. that’s why i said it likely won’t achieve anything positive for the native economic users of bitcoin. they would just be worse off then they are rn.

I think we may not be on the same page. Can I ask you to verify if there isn’t misunderstanding, please? I proposed that the blockspace price was equalized for any type of transaction. As a result, the simple type of transactions (“native economic”) wouldn’t be put at disadvantage. Doesn’t it sound like a positive change?

There is the breakdown and cost comparison of the two actual transactions: https://gregtonoski.github.io/bitcoin/segwit-mispricing/comparison-of-costs.html.

I believe that changing IsDust (or GetDustThreshold, rather) to reflect the intent of the code comments

(if Tx < TxFee) {IsDust = True;}

… would solve a lot of the BRC-20 style b.s.

Murch mentioned to me elsewhere that Child - Parent Txs are perhaps the biggest issue with this idea (outside of Lightning, but LN should easily be able to adapt).

imo it’s a huge mistake to think native economic transactions can’t involve complex script. a multisig typically would involve a sizeable witness. for example a simple typical 2-of-3 with change could be 125 bytes main block data with 254 bytes witness.

but even if you only make native asset transactions marginally more expensive, while forcing alternative assets to be more economic than they are (say via taptweak and client side validation), the users would still need to bid a higher fee rate for the same relative demand.

it really doesn’t sound positive to me.

Indeed, we were not on the same page. I don’t suggest making “native asset transactions marginally more expensive”. On the contrary, I suggest that they should be less expensive.

For example, 6000 simple transactions in a 2 MB block should not cost more sats than 1 complex transaction of the same (2 MB) size.

that’s not how it works imo. the subsidy is a consequence of the space available for various parts. if you reduce the subsidy it means there is less block space. it gets more expensive with the same demand present. the witness bytes become more expensive so native economic transactions get marginally more expensive as a direct consequence. also the cost is highly related to creating new outputs. 6000 transactions creating ~12000 new outputs should be more expensive than a large script transaction creating 1 or 2 outputs.

but like i said, if you only want to remove the unproportional advantage from segwit discount and willing to throw things like BitVM under the bus, you can use the formula i posted above. that likely won’t harm ‘normal’ users of bitcoin.

What makes you think so?

I just want simple transactions not to be thrown under the bus.

If by “simple transactions” N-inputs 2-outputs all using a single signature to sign each input, then I’m not completely sure why those transactions are the correct ones to prioritize.

The reason witness data is discounted is because there are situations during sync where we can prune witness data relatively safely in ways that we cannot do to data that actually effects the transaction graph.

Ideally we would price chain resources in proportion to the costs actually born by the nodes doing the verification, not to preferentially treat any particular use case. The notion of “spam” is incoherent in a decentralized system. If the resource costs are higher than the price paid for them, that is a bug. If “simple transactions” are not a good use of network resources, then quite frankly they should be thrown under the bus.

Not to prioritize but make equal to other transactions. Why would such a transaction remain at disadvantage?

Actually, the simple transactions are treated worse than others as a result of the price discrimination.

Are you trolling, perhaps?

No. I’m legitimately making this claim.

That very well may be. I’m open to the idea that the structure or the size of the witness discount doesn’t reflect the relative difference in resource costs that the network has to bear. However, the path to that argument doesn’t involve making any claim about the use case.

Equal in what sense? I have highlighted a reason that the witness data is fundamentally less expensive to the network than the state transition data (inputs + outputs). If you want to contest that claim, I’m open to hearing it. However, the fact that “simple transactions” are a less efficient use of network resources than the “spam” transactions is just how the chips fall given the current constructions.

Again. I think there may be an argument to say that the witness discount is misguided, but the argument should be about why witness data is more expensive to node-runners (not transactors) than 25% of the state-transition data.

It isn’t hard to demonstrate that it should have a discount > 0%. When syncing the blockchain we cannot arrive at a correct UTXO set without processing 100% of the state-transition data. However, the longer Bitcoin is in existence, the lower % of witness data is actually needed to have a reliable and secure sync as PoW serves as an effective scheme of compressing historical witness data into something that is efficiently verifiable. This is the entire reason behind the default assumevalid setting in Bitcoin Core.

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Why have the discount if utreexo is going to make UTXO set size unimportant?

Equal in the sense that a byte of a simple transaction and a byte of other types of transactions are not discriminated.

Yes, I do contest that claim. I haven’t found evidence that would support it. To the contrary, the network sees 1 byte as 1 byte (indiscriminately) and the deviation (so-called “witness discount”) is being exploited apparently (to the detriment of simple transactions, decentralization and value of sats).

The Bitcoin fee is charged per a transaction (and from a transaction signer). Miners prioritize transactions by fee rate (sats per (v)byte) and collect the fees.

The Bitcoin fee is not charged per UTXO set size. It is not charged from a node operator. Nodes are up and running independently of Bitcoin fees.

Any relation betwen UTXO set size and discount would be artificial and inefficient, wouldn’t it?

The byte size of transactions in the P2P protocol is an artifact of the encoding scheme used. It does matter, because it directly correlates with bandwidth and disk usage for non-pruned nodes, but if we really cared about the impact these had we could easily adopt more efficient encodings for transactions on the network or on disk that encodes some parts of transactions more compactly. If we would do that, the consensus rules (ignoring witness discount) would still count transaction sizes by their old encoding, which would then not correspond to anything physical at all. Would you then still say 1 byte = 1 byte?

So no, in my opinion weighing every byte in the current serialization equally is no less arbitrary than choosing to discount some part of that. A discussion can be had about what the proper way to weigh things is, but it is in my view misguided to treat “bytes in the existing protocol” as inherently more fair than something else.

Ignoring the question of what the proper way to weigh transactions is, I think you’re missing something else here too: the witness discount (or any alternative weighing we’d want) doesn’t just apply to fees, it also reduces the ability for transactions to push out others. This is because the discount literally shrinks transactions from the perspective of the weight limit (which is all that matters for consensus).

As an example, imagine we implement some kind of different weighing scheme that doubles the weight of some subset of transactions. These transactions would now need to pay twice as much, relatively speaking. But they would also take twice as much “space”, meaning they push out twice as much other transaction bytes from the block.

Put otherwise, if you double the weight of some transactions, raising their cost, and thereby say halve the demand for them, their impact on the fee pressure (and your ability to get transactions confirmed) is unaffected. If your goal is getting relief from competition with your own transactions, you need a superlinear impact of fee on demand, which is far from a given.

This asymmetry is exactly the reason why weighing bytes properly (whatever that may mean) is important. Fees are paid to miners, and not to validation nodes. Yet not every byte is equally resource-intensive for validation nodes. Nodes are not powerless however, as they can collectively enforce consensus rules, and the witness discount is an attempt at discouraging bytes that are more impactful to them through consensus rules.


It may eventually have an impact, but I think the reality is a lot more nuanced. Utreexo, as I understand it, introduces effectively a new node type that fully validates but needs proofs to do so. Transactions and blocks cannot be relayed from normal nodes to utreexo nodes directly, but must go through a bridge node that can add the proofs. The resource costs for a bridge node are significantly higher than running a normal full node today, and still scale with the UTXO set size.

Unless the entire ecosystem migrates to a Utreexo model, these bridge nodes and their scalability remains important to the network. Lightweight wallets (as in ones that don’t see full blocks) cannot produce their own proofs, so they’ll inherently need some kind of service to do it for them. Further, presigned transactions cannot have proofs, as the proofs would grow outdated anyway as new blocks are added to the chain.

Miners can adopt Utreexo, but unless nearly all of them do so, the ones who do will be at a disadvantage because they’ll need a bridge service to construct proofs for blocks received from non-Utreexo nodes, which would incur a higher latency than just running an old nodes.

So I think it’s better to say that Utreexo moves the concern of UTXO set size elsewhere, to a place where it may become less relevant for the critical validation path, but doing so has costs too.

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Yes, I would still say 1 byte = 1 byte.

Can I ask you to rephrase the rest of the comment, please? I aim to find out an argument being made against “blockspace price shouldn’t be higher for a simple transaction”.