Ethereum’s co-founder just told Bitcoin’s engineers they deserve credit for an idea he wants to bring home. On August 16, Vitalik Buterin used a post on X to praise Bitcoin developers for pioneering a storage-saving technique called Utreexo, while laying out what he called the “current proposed” direction for scaling the network he built. The message doubles as confirmation that an Ethereum scaling proposal borrowing directly from Bitcoin’s design philosophy is now firmly on the table, even if it hasn’t been approved for deployment.
Summary
Key takeaways
- Vitalik Buterin publicly credited Bitcoin developers for Utreexo while describing Ethereum’s proposed hybrid scaling strategy on August 16.
- Every Ethereum account currently sits permanently in network memory, which keeps making nodes heavier to run over time.
- A July 6 proposal from Ethereum Foundation researcher Toni Wahrstätter estimates that native, Bitcoin-style coin tracking could cut payment-related state usage by roughly 99%.
- Under the new model, recipients would no longer need ETH preloaded in their wallets before a payment can arrive, since the transfer would cover its own fee.
- Cardano founder Charles Hoskinson accused Ethereum of copying his network’s coin-tracking approach after the July proposal surfaced.
- No official launch date has been set for either the native UTXO proposal or Buterin’s related bundling design.
Ethereum proposes using Bitcoin’s UTXO model for scalability
Ethereum’s scaling problem is structural, not seasonal. It stems from the way the network keeps a permanent ledger of every account balance rather than tracking individual pieces of spent and unspent money the way Bitcoin does.
Vitalik Buterin endorses Bitcoin’s coin-tracking design
In his X post, Buterin wrote that “Bitcoiners deserve a lot of credit for pioneering many of these ideas,” specifically pointing to Utreexo, a Bitcoin scaling design. Utreexo was introduced in 2019 by MIT Digital Currency Initiative researcher Thaddeus Dryja. Instead of forcing a node to store the entire list of unspent transaction outputs, or UTXOs, it compresses that set into a compact hash-based accumulator that grows only logarithmically as the underlying set expands. Buterin said he wants Ethereum to capture “the best of UTXO-style state, dynamic state, and everything in between,” which signals a hybrid approach rather than a wholesale replacement of the account system. He was careful to frame it as a proposed direction, not a finalized protocol change.
Ethereum’s current account-based node storage challenges
The motivation is straightforward. Every new Ethereum account is written into the network’s memory and stays there indefinitely, whether or not it’s ever used again. That permanent bookkeeping is a big reason node operators face a growing hardware burden as adoption climbs. Why does this matter for the industry? Because the cost of running a full node shapes who can actually participate in verifying the network, and rising storage demands risk pushing that job toward fewer, larger operators rather than everyday users.
Storage reduction through native UTXOs and payment improvements
The clearest payoff of borrowing Bitcoin’s coin-tracking method is a dramatic cut in the data Ethereum has to keep around permanently. That single change is the backbone of the entire Ethereum scaling proposal now circulating among researchers.
UTXO design could cut Ethereum’s storage by roughly 99%
Wahrstätter’s July 6 proposal, published on the Ethereum Research forum under the handle Nero_eth, suggests adding native, Bitcoin-style payments without removing Ethereum’s existing account model. The idea targets simple, one-shot transfers that don’t need persistent smart-contract state. Rather than storing a full payment record permanently, Ethereum would instead prove that a coin once existed by referencing history, keeping only a compact “spent” marker behind. The numbers illustrate the gap: one billion Ethereum accounts could require up to 150 gigabytes of storage, while one billion spent coins under the UTXO approach would need roughly 300 megabytes. That works out to a reduction of about 99%, according to the proposal’s own estimates, though these figures come from design modeling rather than measurements on live mainnet traffic.
New payment model lets fees ride along with payments
There’s a practical upside for ordinary users, too. Right now, someone has to already hold ETH in their wallet just to cover gas before they can receive funds, which locks out anyone brand new to the network. Under the proposed model, a payment would carry its own fee, meaning recipients could get money sent to them without needing to hold ETH beforehand. That’s a small but meaningful accessibility fix, especially for onboarding new users who have never touched a crypto wallet.
Technical enhancements: bundling proofs and coexisting models
Storage isn’t the only bottleneck this Ethereum scaling proposal addresses. Buterin has also been pushing a separate fix aimed at compressing how transactions get verified across the network.
Bundling transaction verifications into a single compact proof
Back in January, Buterin proposed a recursive-STARK mempool design that tackles proof bandwidth rather than raw transaction throughput. The concept relies on highly optimized STARKs, compact cryptographic proofs of roughly 128 kilobytes, that mempool nodes periodically combine instead of attaching a separate heavy proof to every object being passed around the network. Using Buterin’s own example of eight peers checking in every 500 milliseconds, the extra bandwidth overhead comes out to about 2 megabytes per second per node, and it stays flat even as more transactions enter the system. Developer conall.gwei later connected this bundling idea to Wahrstätter’s UTXO design, suggesting that whoever builds the next block could publish a single 128 kB summary and settle an entire batch of payments at once. Buterin responded to that suggestion directly on X, reinforcing that the two proposals are meant to work together.
Running account and UTXO models side by side
The strategic goal behind all of this is coexistence, not replacement. Buterin wants Ethereum to run traditional account-based activity alongside a lighter UTXO-style track simultaneously, so that most transaction volume can scale up dramatically while ordinary participants can still run a node without specialized hardware. This matters because it preserves one of Ethereum’s core selling points: that regular users, not just large infrastructure operators, can independently verify the chain. Losing that property in the name of raw throughput would trade away decentralization for speed, a tradeoff Buterin has previously said he considers solved through designs like this one.
Community reactions and Ethereum’s development timeline
Not every corner of the crypto industry welcomed Ethereum’s pivot toward Bitcoin-style bookkeeping, and the rollout timeline remains genuinely open.
Charles Hoskinson’s Cardano comparison
Cardano founder Charles Hoskinson pushed back after the July proposal surfaced, accusing Ethereum of copying his own network’s approach to coin tracking. The friction highlights a recurring dynamic in crypto development: when one chain adapts a design that another blockchain already uses, credit and originality quickly become contested, even when the underlying technique, in this case UTXO accounting, traces back to Bitcoin’s original 2009 architecture rather than to either network individually.
2026 priorities, quantum resistance, and no launch date
The Ethereum Foundation isn’t waiting around while this debate plays out. It laid out its 2026 protocol priorities in February, with scaling and security as the twin focus points, and this month it swapped in new core cryptography specifically to guard against future quantum computing threats. Separately, a related component required for the native UTXO design, known as EIP-8141 Frame Transactions, is currently only being weighed for inclusion in Ethereum’s upcoming Hegotá upgrade rather than being scheduled outright. That detail underscores the honest answer to the timeline question: neither the native UTXO proposal nor Buterin’s recursive-STARK mempool design has a confirmed launch date. The open question now is whether the engineering teams actually building Ethereum’s software pick both ideas up, and when.
FAQ
What problem is Ethereum trying to solve by adopting Bitcoin’s UTXO model?
Ethereum aims to reduce the growing network memory burden caused by every account staying in memory forever, which makes nodes heavier and harder to run over time.
How much storage could Ethereum save by implementing the UTXO model?
Storage needs for one billion units could shrink from up to 150 gigabytes to roughly 300 megabytes, a reduction of about 99%, according to the July proposal’s estimates.
Will users need ETH in their wallets to receive payments under the new model?
No. Under the proposed UTXO-based payment design, transfers would cover their own fees, so recipients wouldn’t need to hold ETH beforehand.
When will Ethereum implement these scaling changes?
No official launch date has been set. A related component, EIP-8141 Frame Transactions, is currently only under consideration for the upcoming Hegotá upgrade.
Article produced with the assistance of artificial intelligence and reviewed by the editorial team.
