1744 sats \ 1 reply \ @Murch 27 Nov 2023 \ on: Stranded sats bitcoin
The scenario you describe is not purely hypothetical. In the Christmas 2017 feerate spike, I observed dozens of wallets having large amounts of funds tied up in UTXOs that were economically unspendable. The worst case was a wallet with over 550'000 2-of-3 P2SH UTXOs (up to 297 B to spend) of 10'000 ṩ, while feerates were above 30 ṩ/vB from early December until late January, peaking over 1'000 ṩ/vB.
You should consider how much it will cost to spend a UTXO in the future, how high the feerates might be, and what percentage of funds you are willing to lose to transaction fees for spending your funds in the future.
For example, if you are holding your funds in a P2WPKH input, the input weight will be 272 WU or 68 vB to spend it in the future. Let’s say you don’t want to spend more than 1% towards fees, even if you’d have to pay a feerate of 300 ṩ/vB.
Under the given assumptions, you would want all of your UTXOs to be at least:
68 vB × 300 ṩ/vB × 100 = 2'040'000 ṩ
Generically, the formula would be:
min_utxo_amount = input_weight × feerate / percentage
If your UTXOs are currently stored in a less blockweight efficient output type, or fragmented into smaller amounts, you may want to consolidate. Beware that consolidating outputs reduces your financial privacy in various ways. You could reduce the cost of your future inputs even further by using P2TR outputs which only take 57.5 vB to spend, although that incurs a higher cost for the outputs (see e.g. Is there an economic incentive to switch from P2WPKH to P2TR? on BSE).
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0 sats \ 0 replies \ @elvismercury OP 27 Nov 2023
Thanks for the great response. The link about P2TR is something to chew on for sure.
However, these kinds of scenarios always strikes me as remarkably modest, given that actual btc use by real people (vs rabid bitcoiners or speculators) is extremely low, which I calibrate by the fact that my IRL normie friends outnumber my btc friends 30-1 at least, and even my btc friends transact in btc a fraction as often as they transact in fiat. So if btc succeeds by any realistic definition of the word success, it seems inevitable that there would be 10x the actual on-chain transacting, which we could estimate with shorthand as 10x fees.
In practice, rising fee pressure would really kick L2/L3 adoption in the ass; and maybe people would just keep their corn on exchanges; and maybe fee rates escalating that high would short-circuit the adoption process s.t. it strangled adoption in the crib. The system is dynamic and complicated, I understand that. But even so, under the "success" scenario, 300 sat / vbyte seems absurdly low to me.
What's your take to that take?
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