Ethereum researchers are examining whether the network stores more information as permanent state than some transactions actually require. The question has gained spotlight as a proposed native UTXO design seeks to separate one-time payments from persistent account state.
Under the proposal, simple payments could leave only a small spent marker in Ethereum’s state while their transaction details remain provable through historical commitments. The approach would preserve Ethereum’s account model while introducing a separate value mechanism that does not need to remain active indefinitely.
Ethereum UTXO Proposal Redefines What Becomes State
The Ethereum UTXO proposal, published by Toni Wahrstätter, aka Nero_uth, uses a Bitcoin-style concept for one-shot payments but changes how the network stores the underlying data. In the current account model, receiving $ETH can create a permanent account state entry, while receiving an ERC-20 can create persistent contract storage.
The proposed UTXO system would instead record payment details in transaction history and retain only whether each UTXO has already been spent. Wahrstätter estimates that native UTXOs could reduce permanent state usage for payment workloads by roughly 99.8%.
Each UTXO would contain a source, value, recipient, and protocol-assigned index. Its opening would be emitted in a creation log and committed to an openings root. When the UTXO gets spent, Ethereum would set a corresponding spent bit rather than retaining the complete payment object in active state.
State Growth Extends Beyond Ethereum Mainnet
The distinction between transaction history and active state also appears in recent research covering Ethereum and major Layer 2 networks. A July 2026 study identified nearly 1.4 billion state-invariant transactions across Ethereum, Optimism and Base. The researchers define these transactions as activity that does not change blockchain state beyond transaction fees.
The study found that state-invariant transactions represented 2.6% of Ethereum transactions, compared with 24% on Optimism and 37% on Base. Speculative MEV accounted for 57% of such transactions on Optimism and 68% on Base.
Native UTXOs Could Separate Payments From Persistent State
The proposed design would allow a recipient to spend a UTXO without first holding $ETH in an account. Its frame-based approach combines UTXO inputs, outputs, account payments and gas into a signed transition.
A self-funded transaction could use the consumed UTXO to cover its own gas. Sponsored transactions could instead repay a payer through a structured output that the payer verifies before approving the transaction.
A Different Scaling Model for Ethereum
The proposal introduces a way to distinguish transactions by the amount of permanent state they create. One-shot payments could use ephemeral UTXO-style value, while applications requiring persistent balances, contract storage or long-lived positions could continue using Ethereum’s account-based state.
Ethereum’s scaling discussion, therefore, extends beyond processing more transactions. It also concerns how much information each transaction requires the network to retain permanently.
For Layer 2 networks, the same distinction could affect how transaction activity is processed and settled, since rollups publish transaction data and state commitments to Ethereum.
The native UTXO proposal does not replace Ethereum’s account model. Instead, it outlines a separate path for transactions whose value may need to exist once, be spent once, and then leave only minimal permanent state behind.
L2s Face the Same State Question
The issue extends beyond the Ethereum mainnet. A July 2026 study identified nearly 1.4 billion state-invariant transactions across Ethereum, Optimism and Base. It defined these as transactions whose inclusion or removal does not change blockchain state beyond transaction fees.
The study found that state-invariant transactions accounted for 2.6% of Ethereum transactions, compared with 24% on Optimism and 37% on Base. The findings raise a scaling question about whether resources should reflect how much lasting state a transaction creates.
Related: Ethereum May Sacrifice Capital Markets for Monetary Purity Under EIP-8361
