How did a large exchange save 80%? Read on!

What are UTXOs?

Blockchains like BTC, LTC, DASH, and others rely on Unspent Transaction Outputs (UTXOs) to keep track of account balances. UTXOs are essentially funds received by and available for a wallet. The balance of a wallet consists of the sum of all its UTXOs.

When sending funds, a wallet may group several UTXOs if the amount sent is larger than what is available in any single available UTXOs.

Image showing BTC wallet addresses and balances

Why does efficient UTXO management matter?

Businesses handling large numbers of inbound and outbound payments, such as retail facing exchanges, can save a considerable amount of money by efficiently handling UTXOs.

Blocks found in the blockchain are limited in size and consist of a limited number of transactions. A transaction consists of a header, a signature and transaction data. The transaction data consists of:

– one or more UTXOs used to fund the transfer and

– one or more UTXOs (depending on the number of recipients) to receive (some or all of) the funds transferred.

When collecting large numbers of deposits to the same address, transferring one UTXO at a time is inefficient as each transaction requires its header and signature. It is more economical to group several UTXOs into a single transaction as this only uses a single header and signature.

Grouping several UTXOs to fund a single one offers additional benefits. When transferring funds out to many addresses, it is more economical to use fewer UTXOs, as this translates to lesser transaction data. It is also more economical to group several recipients into a single transaction as this only requires a single header and signature.

When collecting and transferring many thousands of payments, following the above strategies can help save thousands of dollars in network fees. But while efficient UTXO management is essential, it also requires more attention to detail which can be time-consuming.

How does THRESH0LD help?

THRESH0LD’s automated UTXO management system helps minimise your mining fees without the headache of manual UTXO reconciliation.

When collecting deposits, you simply specify:

  • how many UTXOs you wish to group (up to 650 UTXOs for BTC, BCH, BSV, DASH, LTC & up to 400 UTXOs for ADA)
  • a manual or average transaction fee
  • times you wish to collect deposits

When sending funds out to many addresses, you specify:

  • how often payments should be made during the day/night
  • transaction fees to be offered to miners

Transfer requests received between two payment intervals are automatically grouped to save on network fees. THRESH0LD automatically selects UTXOs resulting in lesser transaction data.

In addition, THRESH0LD Duo wallets save you even more on BTC and LTC, by removing the need for an on-chain transaction to collect funds. Deposits are immediately available for withdrawal.

Want to cut costs and increase your bottom line?

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