Ethereum UTXO Proposal Aims to Reduce Permanent State Usage by 99.8%

Ethereum researchers are exploring ways to reduce the network's permanent state usage by leveraging a Bitcoin-style concept for one-shot payments. The proposed native UTXO design would separate simple payments from persistent account state, potentially cutting permanent state usage by 99.8%.

The current Ethereum account model stores transaction details in the permanent state, which can lead to unnecessary data storage. In contrast, the proposed UTXO system would record payment details in transaction history and retain only whether each unit of exchange has been spent.

The distinction between transaction history and active state also appears in recent research covering Ethereum and major Layer 2 networks. A July 2026 study identified nearly 1.4 billion state-invariant transactions across Ethereum, Optimism, and Base, with implications for scaling discussion on the network.