Ethereum eyes UTXO model to cut node storage by 99%

Ethereum is exploring a hybrid scaling model blending UTXO-style and account-based state, a shift that could cut node storage by roughly 99 percent.

Vitalik Buterin credited Bitcoin developers for Utreexo, a system that compresses the unspent-transaction-output set. "Bitcoiners deserve a lot of credit for pioneering many of these ideas," Buterin said in an Aug. 16 post on X.

Full execution nodes now require 0.9 to 1.3 TB of storage, with baseline state growth approaching 100 GB annually. Roughly 80 to 82 percent of data held on Ethereum is produced as new permanent records, versus 14 percent from accounts and 4 percent from contract code.

The proposal, published July 6 on the Ethereum Research forum by researcher Wahrstätter, estimates one billion accounts could require up to 150 GB of storage, while one billion spent coins under a UTXO approach would need about 300 MB — a reduction of roughly 99 percent.

How a UTXO track would work

The design targets simple, one-shot transfers that don't need persistent smart-contract state. Rather than storing a full payment record permanently, Ethereum would prove a coin once existed by referencing history, keeping only a compact "spent" marker. Less than 4 percent of account and storage records are accessed within 30 days, so moving dormant records elsewhere eases node storage without removing historical information.

A practical upside for new users: payments would carry their own fee, so recipients could receive funds without holding ETH beforehand to cover gas.

Bundling proofs and the roadmap

Buterin has also pushed a separate fix aimed at compressing verification. A January proposal for a recursive-STARK mempool relies on compact cryptographic proofs of roughly 128 kilobytes that mempool nodes periodically combine. Using Buterin's example of eight peers checking in every 500 milliseconds, bandwidth overhead comes to about 2 MB per second per node, staying flat as more transactions enter the system.

The UTXO design and the proof-bundling idea are meant to work together, with a block builder able to publish a single 128 kB summary and settle an entire batch of payments at once.

Timeline and pushback

No launch date is set. A related component, EIP-8141 Frame Transactions, is under consideration for the upcoming Hegotá upgrade. The Ethereum Foundation laid out 2026 protocol priorities in February with scaling and security as the focus, and this month swapped in new core cryptography to guard against quantum computing threats.

Cardano founder Charles Hoskinson pushed back after the July proposal surfaced, accusing Ethereum of copying his network's approach to coin tracking. The underlying technique traces back to Bitcoin's original 2009 architecture rather than to either network individually.

For node operators, the shift matters because storage demands shape who can verify the network. If Ethereum keeps frequently used information readily available while moving dormant records elsewhere, more everyday users could run full nodes without specialized hardware — preserving the decentralization that underpins the network's value. ETH traded at $1,896 as of the latest data, up 1.35 percent.

This article is for informational purposes only and does not constitute investment advice.