Utreexo is a proposed alternative to the UTXO set for allowing full nodes to obtain and verify information about the UTXOs being spent in a transaction.
A merkle tree updated after every block accumulates references to every unspent transaction output, allowing nodes to skip storing the outputs themselves. New transactions can be distributed with the UTXOs they spend and a merkle branch proving they’re part of the utreexo merkle tree. Overall, this can decrease the amount of storage full nodes need to a minimal amount at the cost of modest increases in bandwidth. Utreexo would not change Bitcoin’s security model.
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