Three reasons why UTXO is superior to account model

Although the Account model is more developer friendly, end-user experience for UTXO model is superior to Account model in pretty much every way possible. Here’s why:

  1. Ether (ETH) is the fuel for executing Ethereum transactions. When you interact with an EVM, you must pay the computation. That computation is calculated in gas, and gas is ONLY paid in ETH. Many Ethereum users complain about having ERC-20 tokens, but unable to move them since they don’t have the base currency ETH. Whereas in the UTXO model with covenants, users can transfer tokens by covering fee with the same token from the amount they transfer, without depending on the base currency. This can be applied to wide range of DeFi applications from NFT auctions to yield farming in many seamless ways. The overall UX becomes better at a significant margin.
  2. Ethereum users pay for the computation, regardless their transaction succeeds or fails. Even if it fails, the miners must validate and execute the transaction, which takes computational power. Users must pay for that computation, just like they would pay for a successful transaction. This is because a nonce field must increase in every subsequent transaction. Since network can’t pre-predict if a parent transactions fails, child transactions must have parents that are part of the chain regardless they fail. This is not only inefficient in terms of IBD time, storage, computation and bandwidth, but also an awful UX from end-users perspective. UTXO model, thankfully, is not dependent on nonce synchronization, and failed transactions cannot end up in a block. This brings an overall user-friendly user experience.
  3. From multiple CoinJoin inputs to MuSig aggregations, UTXO model provides a higher level of privacy in every way possible. Account model is generally detrimental to privacy since the account is tied to a single owner which anyone can track the address of who has been paid.

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