qip-0012: Qi UTXO Pruning

README.md

@@ -19,5 +19,6 @@ Those proposing changes should consider that ultimately consent may rest with th
 | [9](qip-0009.md)  | Consensus (hard fork) | Interlinks                       | gameofpointers | standard | Draft  |
 | [10](qip-0010.md) | Consensus (hard fork) | Network Object Identifiers       | wizeguyy       | standard | Draft  |
 | [11](qip-0011.md) | Consensus (hard fork) | Paying for Account State Usage   | wizeguyy       | standard | Draft  |
+| [12](qip-0012.md) | Consensus (hard fork) | Qi UTXO Pruning                  | wizeguyy       | standard | Draft  |
 
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qip-0012.md

@@ -0,0 +1,51 @@
+```
+ QIP: 12
+ Layer: Consensus (hard fork)
+ Title: Qi UTXO Pruning
+ Author: wizeguyy <[email protected]>
+ Comments-Summary: No comments yet.
+ Comments-URI: https://github.com/quainetwork/qips/wiki/Comments:QIP-0012
+ Status: Draft
+ Type: Standards Track
+ Created: 2024-04-02
+ License: BSD-2-Clause
+```
+
+## Abstract
+This QIP proposes a mechanism to prune dust UTXOs from the ledger.
+
+## Motivation
+Transaction outputs in the Qi UTXO ledger, occupy space and impose a burden on
+UTXO transaction processing, from the set root recomputations. This is not a
+problem under normal usage, but can become a problem if any users/wallets are
+lazy or irresponsible with UTXO reconsolidation, or worse if the network
+undergoes a spam attack. This QIP describes a protocol change to disincentivize
+UTXO state pollution without meaningfully impacting normal transactional
+behavior.
+
+## Rationale
+Normal Qi wallet behavior will involve some amount of UTXO splitting, to create
+change outputs for payments, as well as UTXO reconsolidation as the wallet
+acquires too many small change outputs. This QIP should not negatively impact
+this expected user behavior, but should provide a cost to lazy wallets that do
+not reconsolidate change outputs.
+
+## Specification
+We achieve this simply, by limiting the size of the UTXO set. If a transaction
+creates new UTXOs which would exceed the UTXO set capacity, we destroy the
+smallest UTXOs in the ledger. This is practical to do thanks to the fixed
+denominations in the Qi ledger.
+
+Since the network cost we are trying to control is related to the construction
+of the UTXO set root, it is sensible to choose a capacity that reflects a
+particular depth of the state tree. Since we use a Patricia Merkle trie, the
+state root recomputation is bounded by the radix-16 update cost bound:
+$O(log_{16}(N))$, where $N$ is the number of UTXOs in the set.
+
+We set a max trie depth size of 10, which corresponds to a max UTXO set size of
+$16^{10} \approx 1 trillion$ UTXOs. If a transaction mints new UTXOs which exceed
+the $16^10$ limit, the node shall prune all of the smallest UTXOs from the UTXO
+set, repeating this process until the UTXO set size is back within the limits.
+
+## Copyright
+This QIP licensed under the BSD 2-clause license.