Ethereum co-founder Vitalik Buterin has backed a Bitcoin-inspired approach to scaling Ethereum, highlighting Utreexo as one of the ideas Bitcoin developers pioneered that could influence Ethereum’s future architecture.
Buterin said in a post on X, “Bitcoiners deserve a lot of credit for pioneering many of these ideas (see Utreexo).” He added that the approach reflects Ethereum’s current proposed scaling strategy, which aims to combine UTXO-style state, dynamic state and models in between.
According to Buterin, the goal is to allow most Ethereum activity to be “hyperscaled” without sacrificing decentralization, ease of running nodes or censorship resistance.
Bitcoin’s UTXO model inspires Ethereum
Ethereum currently relies heavily on an account-based model, where balances and application data can remain in the network’s persistent state. Bitcoin, by contrast, uses Unspent Transaction Outputs (UTXOs), which are created when funds are received and removed from the active UTXO set after they are spent.
Ethereum researchers are exploring whether the advantages of UTXOs can be added without replacing Ethereum’s account system.
A proposal by Ethereum researcher Toni Wahrstätter, published under the name Nero_eth, outlines native UTXOs for one-time payments that do not require permanent account state. The design would keep information about UTXO creation in blockchain history while retaining only a compact spent marker in state.
The proposal estimates that this could reduce permanent state usage for such payments by roughly 99.8%, although the figures remain design estimates rather than results from a live Ethereum implementation.
Utreexo could reduce state burden
Utreexo is particularly relevant to the discussion because it tackles the growing storage requirements of Bitcoin’s UTXO set. Introduced by Thaddeus Dryja in 2019, Utreexo uses a hash-based accumulator to represent the UTXO set compactly. Instead of requiring every node to maintain the full set, transactions can include proofs showing that specific outputs belong to the committed set.
Ethereum’s proposed native UTXO design follows a related principle: prove information from blockchain history when needed rather than permanently storing the entire payment object.
The proposed system would keep a small spent-bit record to prevent an output from being used twice, while its creation details could be proven through historical commitments. This approach could give Ethereum different state models for different types of activity, rather than requiring simple payments and complex applications to use the same state structure.
Scaling beyond UTXOs
The UTXO proposal is also being discussed alongside Buterin’s research into recursive STARKs for Ethereum’s mempool.
That work targets networking rather than persistent state. Instead of transmitting large validity proofs with every object, mempool nodes could recursively combine proofs and distribute an aggregated STARK to peers.
A community proposal suggested that recursive STARKs could potentially be combined with UTXO transactions, allowing large numbers of transactions to be represented more efficiently at the networking layer.
However, that concept is not an Ethereum throughput commitment. Buterin’s comments describe a broader research direction, not an approved design for unlimited transaction capacity.
Ethereum’s hybrid scaling strategy
Buterin’s comments point to a hybrid Ethereum model. Accounts would continue to support applications that need permanent state, while UTXOs could be used for simple, one-time payments.
EIP-8141 could also make Ethereum more flexible by supporting different signature systems and making privacy features easier to use. This may help the network adapt to future cryptographic changes, including possible post-quantum risks.
The proposed native-UTXO design also uses EIP-8141 Frame Transactions for spending UTXOs. Under the proposal, this could allow a UTXO to cover its own transaction fees, meaning users would not need to hold ETH in a separate account before spending those funds.
EIP-8141 remains a proposal rather than a finalized Ethereum upgrade. Its inclusion in the native-UTXO design therefore describes how the proposed system could work, not a confirmed commitment by Ethereum developers to adopt native UTXOs.
The broader native-UTXO concept also remains under research. If adopted, it could give Ethereum different state models for different types of activity, with UTXOs potentially handling simple, one-time payments while the existing account-based model continues supporting applications that require persistent state.
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