Ethereum: Since Bitcoin Core 0.14.0, how does a node with default settings calculate the dust limit?

Ethereum: Understanding the Dust Limit on Node Computations

In previous versions of Bitcoin Core, the dust limit was defined as an output that would require more than a third of its value in fees to spend. However, with the release of Bitcoin Core version 0.14.0 and subsequent updates, a new approach was adopted to calculate the dust limit on node computations.

The Old Method: Fee-Based Dust Limit

Before the new method was introduced in 2016, the dust limit was calculated based on the total value of all transactions spent by the network at a given time. This calculation took into account the fees paid for each transaction and determined that the output with a value greater than a third of its fees would be considered “dusty”. The old method relied heavily on manual calculations and adjustments to determine the dust limit, making it prone to errors.

The New Method: Calculating the Dust Limit

With the introduction of the new method in 2016, the Ethereum team simplified the calculation by using a threshold-based approach. According to a 2017 Ethereum developer blog post, nodes with default settings use the following formula to calculate their dust limit:

dust_limit = (total_balance / total_spending) * 3

Where:

• total_balance is the sum of all balances on the node at a given time

• total_spending is the total amount spent by the network during that same period

This calculation only considers spending activity and ignores fees paid for each transaction. As a result, nodes with default settings can calculate their dust limit more accurately and efficiently.

Conclusion

The new method introduced by Ethereum has streamlined the dust limit calculation process, making it easier for nodes to manage their node balance and avoid “dusty” outputs. By using a threshold-based approach, nodes can calculate their dust limit without manually adjusting fees or performing manual calculations. This change has improved the overall reliability and efficiency of Ethereum node calculations.

Additional Resources

• Ethereum Developer Blog: “New Method for Calculating Dust Limit”

• Ethereum Stack Exchange: “Ethereum Node Calculation: Calculating Dust Limit”