Ethereum researchers proposed UTXO-based model to cut data growth by 99.8%

Reducing data load is at the core of the proposal

The main challenge Ethereum faces stems from its account-based structure, which requires every wallet’s balance to be persistently stored as active data. Even when a transaction occurs only once, these records continue to occupy space on the blockchain’s memory. Through Ethereum Improvement Proposal (EIP) 8141, Wahrstatter has introduced the idea of ‘Frame Transactions’ that would make simple payments single-use.

Under this system, transaction details would be validated from historical blockchain records only when needed. In active memory, a single bit would indicate whether a transaction output has been spent. Wahrstatter estimates that this framework could reduce unnecessary data growth from basic transfers on Ethereum’s base layer by as much as 99.8%.

Mini glossary: UTXO stands for unspent transaction output, a model where each new payment consumes a previous unspent output. eUTXO is an extended version, adapted by Cardano to allow for more advanced features like smart contracts.

Wahrstatter’s proposal aims to make simple payments single-use, which he believes would cut data growth on the base layer by 99.8%.

The proposal has entered the initial “Strawman” discussion phase within the Ethereum community, with Vitalik Buterin among those following the developments. However, implementing such a change would require not only a technical assessment but also a thorough evaluation for compatibility with existing applications.

Hoskinson criticizes with accusations of hypocrisy

Charles Hoskinson, founder of Cardano, responded sharply to these developments. Hoskinson parted ways with Ethereum in 2014 following disagreements with Vitalik Buterin, particularly regarding the network’s commercial direction and long-term architectural roadmap.

Hoskinson believes that within the Ethereum ecosystem, there remains an unspoken taboo against acknowledging his contributions.

For Hoskinson, this debate is not just technical but also symbolic. From day one, Cardano was designed around the Extended UTXO—eUTXO—model to address scaling challenges. Ethereum, on the other hand, has long championed the account-based system as the opposite approach.

Technical overlaps raise new risks

The UTXO model is historically associated with Bitcoin, which operates mainly as a value transfer system with limited capacity for smart contracts. Cardano extended the same logic to create a more flexible infrastructure for complex applications.

Ethereum researchers now considering features inspired by this model to tackle memory constraints is, in some quarters, seen as indirect validation of solutions pioneered elsewhere. Still, merging two disparate architectures is no small feat. Such a hybrid approach could create compatibility risks for the many DeFi applications currently operating on Ethereum.

This means Ethereum now faces two main options: either continue to manage its growing database as is, or pursue a hybrid solution involving a more radical architectural shift.