Market Overview

BitGo Introduces Predictive UTXO Management Delivering Up to 30% in Savings

Share:

Contributes Updated Open Source Library for UTXO Transaction Building

BitGo, Inc., the market leader in institutional-grade cryptocurrency
investment services, today announced that it has launched Predictive
UTXO (Unspent Transaction Output) Management for fee-sensitive
transaction building to address the costs associated with operating high
traffic wallets. BitGo is the first company to bring Predictive UTXO
Management to institutional investors. Early results show that
Predictive UTXO Management can deliver transaction fee savings of up to
30 percent.

The increasing fragmentation of coins has created an environment where
customers often hold up to hundreds of thousands of tiny coin fragments.
Using each of these fragments requires a processing fee and customers
can incur significant costs when many fragments are processed when
transaction fees are high.

Predictive UTXO Management is an algorithmic solution that automatically
takes advantage of low transaction fees to address the costs associated
with processing many coin fragments. Developed by Mark Erhardt, BitGo
engineer and Bitcoin Core contributor, Predictive UTXO Management
reduces the overall cost by minimizing transaction sizes at high fee
rates, while automatically sweeping up and processing many small
fragments of coins when fees are low. As a result, more coin fragments
are spent at lower fee rates, reducing transaction fees overall. Savings
are dependent on usage patterns and future fee rate values. Clients with
larger wallet balances are likely to see more savings than clients with
smaller wallet balances.

Examples of Savings with Predictive UTXO Management

  • For a transaction built when fee rates were high, Predictive UTXO
    Management reduced the number of inputs from 200 to 5. The resulting
    transaction avoided the creation of a change output, saving additional
    fees and avoiding the incurred future cost of the newly created coin
    fragment. In total, fees for the payment were reduced by a factor of
    39.
  • For another transaction, Predictive UTXO Management leveraged the
    nominal fee rates to prefer consumption of 99 inputs over a
    transaction with only 18 inputs that avoided a change output.

"Our focus on the institutional market means that we have large clients,
holding large balances and fee optimization can have a dramatic effect,"
said Mike Belshe, CEO, BitGo. "Mark's algorithm improves the experience
of BitGo clients and it will improve the experience for all Bitcoin
investors because it was recently adopted by the Bitcoin Core team."

Open Source Library for UTXO Transaction Building

In the course of development, the BitGo engineering team expanded the
bitcoinjs library to support other cryptocurrencies including Bitcoin
Cash and Zcash's latest fork. The resulting library, bitgo-utxo-lib, is
now available on GitHub and NPM. The library does all the heavy lifting
for protocol implementation so any developer working with UTXO-based
blockchains can use this library to build transactions and sign them.

GitHub: https://github.com/BitGo/bitgo-utxo-lib
NPM:
https://www.npmjs.com/package/bitgo-utxo-lib

"We're committed to contributing back to the open source community and
we will continue to maintain this library," Belshe said.

Predictive UTXO Management is now active for all BitGo Platform V2
wallets that have UTXOs. Clients using Platform V1 should move their
funds to Platform V2 wallets.

About BitGo

BitGo, Inc. is the market leader in institutional-grade cryptocurrency
investment services. BitGo is the world's largest processor of on-chain
bitcoin transactions, processing 15% of all global bitcoin transactions,
and $15 billion per month across all cryptocurrencies. The company has
over $2 billion in assets in wallet, and a customer base that includes
the world's largest cryptocurrency exchanges and spans more than 50
countries.

View Comments and Join the Discussion!