Ethereum UTXO Proposal Could Cut Permanent State Usage by 99.8%

A new Ethereum proposal seeks to reduce permanent state usage by implementing a native UTXO design. This concept, inspired by Bitcoin's approach to one-shot payments, would separate simple transactions from persistent account state.

The current Ethereum account model can create permanent entries for every transaction, including ERC-20 transfers and contract storage. In contrast, the proposed UTXO system would record payment details in transaction history while retaining only a spent marker in active state.

According to estimates, native UTXOs could reduce permanent state usage by 99.8% for payment workloads. This approach would not replace Ethereum's account model but provide a separate path for transactions that require minimal long-term storage.