Vitalik praises Bitcoin, Ethereum targets UTXO model to achieve thousand-fold expansion

TLDR: Ethereum draws on Bitcoin's UTXO model to achieve thousand-fold expansion

Native UTXO can reduce Ethereum's payment status by 99.8%

Vitalik praised Bitcoin's UTXO design. Ethereum is exploring a mixed-state model with the goal of achieving thousand-fold expansion.

Native UTXO reduces permanent payment state usage by 99.8%, compressing a billion entries to approximately 300MB.

Ethereum status is growing by approximately 100GB every year, and status efficiency has become a key constraint on thousand-fold expansion.

Recursive STARK can increase bandwidth requirements by approximately 2MB/s with the activity size under eight-node connections and 500-millisecond aggregation.

As researchers set out to solve one of blockchain's most difficult expansion problems-how to keep state controllable as network activity grows-Ethereum is increasingly drawing on Bitcoin's ideas. In a post on August 16, Vitalik Buterin praised Bitcoin developers for taking the lead in proposing many concepts that have influenced Ethereum research, particularly mentioning the Utreexo project.

"Bitcoin developers deserve credit for creating many of these ideas (see Utreexo). Yes, this is how the currently proposed Ethereum expansion strategy actually works. We want Ethereum to combine UTXO-style state, dynamic state and everything in between..."

This emerging strategy does not replace Ethereum's account system, but combines UTXO-style structure with dynamic state and other methods. The goal is to significantly increase the scale of activities while maintaining decentralization, anti-censorship and actual operability of nodes.

Ethereum's shift to Bitcoin UTXO model for thousand-fold expansion

The shift is part of a broader research roadmap aimed at achieving approximately 1000-fold long-term expansion in execution, data availability and state management. Buterin wrote in February that with ZK-EVM, execution capabilities can ultimately be scaled approximately 1000 times. At the same time, PeerDAS and blobs provide approximately 500 times more data expansion. However, there are different challenges in terms of status-Ethereum's active status has grown by about 100GB every year.

As persistent accounts and storage entries continue to accumulate, nodes must process increasing amounts of information, which can drive up network operating costs. To solve this problem, Ethereum researcher Toni Wahrstätter put forward a proposal in July that included native UTXO as one of the possible solutions.

Under Ethereum's current account model, receiving ETH or tokens creates a persistent state. In contrast, UTXO-style payments are treated as one-time objects that can be consumed when subsequently spent. Under the proposal, native UTXO can reduce permanent state requirements by approximately 99.8% for paid workloads that do not require persistent storage. Instead of keeping every complete payment object in an active state, Ethereum can save its creation information in a historical log, retaining only a compact flag indicating whether the object has been spent.

This reduction is more pronounced when the scale is expanded. The proposal estimates that for a billion entries, permanent UTXO status only requires approximately 300MB, while the equivalent account or storage entry requires 100GB to 150GB. This gap helps explain why bitcoin-inspired architectures are becoming increasingly important in Ethereum expansion research. However, the proposed model will be hybrid rather than completely replacing Ethereum's existing account structure. Smart contracts and applications that require dynamic storage can continue to use traditional accounts, while simple transfers can be moved into lighter status categories, reducing the amount of permanent information nodes must retain.

Bitcoin's Utreexo project provides another reference point for this approach. Rather than requiring each node to store a complete UTXO dataset, Utreexo uses a compact Merkle tree accumulator with cryptographic proof of inclusion. As a result, Bitcoin Optech estimates that the design can reduce local state requirements to just a few KB while still allowing nodes to perform full transaction verification.

Native UTXO reduces Ethereum payment status by 99.8%

Ethereum researchers are still studying how native UTXO works with Buterin's proposed recursive STARK memory pool. In this system, memory pool nodes regularly combine transaction validity proofs into recursive STARK. A single certificate can reach approximately 128KB, but the aggregation mechanism prevents bandwidth requirements from growing proportionately with transaction activity. One example estimates that for a node that maintains eight node connections with an aggregation interval of 500 milliseconds, the additional bandwidth is approximately 2MB per second.

Subsequent research discussions linked this design to native UTXO. A large number of independent payments can be proved recursively before being aggregated into smaller aggregated proofs. However, the architecture is still in the experimental stage rather than upcoming network changes. The native UTXO proposal, which relies in part on EIP-8141 (Framework Transaction), is still in the draft stage.

Still, this study suggests that Ethereum's expansion strategy is broadening. Bitcoin-inspired state structures are being studied along with zero-knowledge proofs to reduce node burdens while supporting significantly increased activity scales.