Reality-based UTXO Ledger

Abstract

The Unspent Transaction Output (UTXO) model is commonly used in the field of Distributed Ledger Technology (DLT) to transfer value between participants. One of its advantages is that it allows parallel processing of transactions, as independent transactions can be added in any order. This property of order invariance and parallelisability has potential benefits in terms of scalability. However, since the UTXO Ledger is an append-only data structure, this advantage is compromised through the presence of conflicting transactions. We propose an extended UTXO Ledger model that optimistically updates the ledger and keeps track of the dependencies of the possible conflicts. In the presence of a conflict resolution mechanism, we propose a method to reduce the extended ledger back to a consistent UTXO Ledger.