Enhancing Coin Selection in UTXO-based Blockchains through Modified Greedy Algorithms

This paper studies coin selection algorithms employed by UTXO-based blockchains, such as Bitcoin and Cardano. In particular it introduces a modified greedy algorithm. Its aim is to minimize the UTXO pool size and keeping the transaction fee low. The adjustment results in a substantial average decrease of approximately 85% in the UTXO pool size, with a marginal average transaction fee increase of only approximately 0.07%. This paper prompts a critical inquiry into the nature of this trade-off, raising the question of whether the balance achieved is indeed a trade-off or if the focus should be redirected towards further optimizing the conventional greedy algorithm.