I am a relative noob to the more technical stuff, but just thinking about it myself, utxo set growth seems like a huge issue.
If the utxo set grows to be several terabytes - it could eventually be 100s of terabytes? - then that means running full nodes becomes costly. And then it becomes costly to validate transactions in a new block, and so there is more chance that people start trusting others to do the validation for them. And then shenanigans become possible.
The only solution I currently see to a large utxo set is to prune it to a set size, and smaller utxos become unspendable, which doesn't seem ideal.
I know of utreexo, but that seems like it has issues as there is no incentive to run a bridge node. And so we're still trusting people to run those bridge nodes - and it seems that might be costly. Maybe with some tweaks this can be fixed it'll be cheap for most people to validate transactions?
Are there other potential solutions that I've not heard of / that people are working on?
In the mean time, we have people spamming the utxo set with stuff like bitcoin stamps, increasing the size quickly. To me this feels like an attack as the size of the utxo set has long term consequences for the affordability of future full nodes. I would think this needs addressing sooner rather than later, but nobody seems to be panicking about this, so maybe I'm missing something?
I know some people argue for filters, but as I understand it that only prevents someone from getting into the mempool for a node that enforces those filters. It doesn't prevent a miner processing transactions with large utxos. So it doesn't seem more than a band aid on the problem.
I don't understand why people aren't arguing for a block size decrease - that seems like the obvious solution? Since the central problem seems to be that there currently isn't enough competition for space in blocks.
But even if the utxo set was growing at a modest rate, I still don't see what the long term solution is. Maybe there is no avoiding that, in the future, full nodes will be costly to set up and maintain, but it's not an existential risk?