Ethereum co-founder Vitalik Buterin has outlined a hybrid scaling direction that would allow the network to support UTXO-style state, Ethereum's existing dynamic state and other specialized forms of state alongside each other. The goal is to push a large share of Ethereum activity toward structures that can scale far more aggressively without forcing every application into the same model.

"We want Ethereum to have the best of UTXO-style state, dynamic state, and everything in between," Buterin wrote on August 16, adding that the objective is to hyperscale most Ethereum activity without sacrificing decentralization, ease of running nodes or censorship resistance.

Ethereum Needs a New Way to Scale State

In February, Buterin divided the network's long-term scaling challenge into three resources: execution, data and state. Execution could eventually scale by roughly 1,000x through ZK-EVMs, while PeerDAS and blobs provide a path toward dramatically higher data capacity. State is considerably harder.

Buterin estimated that Ethereum's state currently grows by roughly 100 GB annually. Scaling that growth by 20x could create around 2 TB of new state every year and approximately 8 TB over four years. The difficulty is not simply buying larger disks. Builders still need to obtain and efficiently access this information, making permissionless syncing increasingly difficult as the database expands.

Instead, Ethereum could preserve its existing dynamic state for applications that genuinely need it while introducing cheaper and more restrictive forms of state for workloads that do not. That thinking is already becoming part of the broader Lean Ethereum vision, which combines new state models with recursive STARKs, quantum-resistant cryptography, formal verification and simpler protocol architecture.

It also continues the longer-term direction described in Ethereum 2035, where scalability is treated alongside privacy, resilience and decentralization rather than as an isolated throughput target. One option is temporary state that disappears after a defined period. Another increasingly important option is UTXO-style state.

Native UTXOs Could Carry a Large Share of Ethereum Activity

Bitcoin's UTXO model works differently from Ethereum accounts. Instead of maintaining a continuously updated account balance, funds exist as individual unspent transaction outputs. A transaction consumes previous outputs and creates new ones.

A July research proposal titled Native UTXOs on Ethereum explores how Ethereum could support this structure without abandoning its existing account model. The proposal introduces native UTXOs whose existence can be proven from historical commitments.

Once a UTXO is spent, Ethereum would not need to retain another full account or storage entry. The protocol could primarily record that the specific output has been consumed. In a pure UTXO-to-UTXO transaction, no account state has to be modified. New outputs become independent UTXOs, while an optional mechanism allows value to return to Ethereum's account architecture whenever an application needs it.

A complex DeFi protocol could continue using dynamic contract storage. Simple asset ownership or transfers could potentially move toward UTXOs. Short-lived applications could use temporary state.

Buterin's earlier state research suggested that common workloads such as ERC-20 balances and NFTs may eventually be standardized around cheaper state structures, while applications with more complicated synchronous interactions could continue using conventional Ethereum state.

Recursive STARKs Could Aggregate UTXO Transactions

In January, Buterin proposed a recursive-STARK-based bandwidth-efficient mempool. The problem begins with proof size. Even highly optimized STARKs can be around 128 kB. If every user attached a separate STARK to every object broadcast across Ethereum's mempool, bandwidth requirements would quickly become impractical.

But recursive proofs allow many proofs to be compressed into another proof. Under Buterin's design, mempool nodes could receive transactions or other objects together with proofs of validity. At regular intervals, nodes could generate a recursive STARK proving the validity of all currently known objects and forward that single proof alongside the objects themselves.

Instead of carrying independent proof overhead for every transaction across the entire networking layer, validity becomes recursively aggregated as transactions move toward a block builder.

This mechanism has become increasingly important in Ethereum's long-term architecture. EtherWorld's Lean Ethereum coverage explains how recursive STARK verification could eventually become a first-class protocol component rather than remaining limited to external scaling systems.

Ethereum's growing proof ecosystem is already visible beyond protocol research. EtherWorld recently tracked nine ZK projects shaping Ethereum's proof economy, covering zkVMs, prover networks and privacy infrastructure.

The connection to native UTXOs came from Ethereum researcher Conall O'Reilly. O'Reilly asked whether the same recursive mempool system could aggregate proofs of UTXO spends. Because UTXOs are largely independent, many spends could theoretically be aggregated through the networking layer before a single roughly 128 kB root proof is included in the final block.

It is still research, not a production specification. But it demonstrates why UTXOs become much more interesting when combined with Ethereum's broader STARK roadmap.

What This Hybrid Ethereum Could Look Like

One possible future Ethereum could contain several layers of state.

• Dynamic state would remain available for contracts that need Ethereum's existing programmability and synchronous composability.
• UTXO-style state could handle large volumes of assets and simple state transitions with far smaller permanent-state requirements.
• Temporary state could serve auctions, games, governance votes and other information that only needs to exist for a limited period.

Recursive STARKs could then aggregate proofs of many independent operations before they reach the chain. This direction complements other major changes already moving through Ethereum's roadmap.

Glamsterdam is targeting major execution improvements, while Hegota is developing around censorship resistance, networking, validator improvements and potential execution-layer changes.

FOCIL remains a central part of that upgrade direction. EtherWorld has tracked its progress through ACDE #241, where developers reaffirmed its role while keeping native account abstraction as a separate candidate.

Scaling also cannot be separated from transaction privacy and censorship resistance. EtherWorld's analysis of Ethereum's encrypted mempool roadmap shows how larger throughput alone does not solve transaction visibility, MEV or neutral inclusion.

The broader argument was explored in Hegota Should Complete the Holy Trinity of Censorship Resistance, which examines how ePBS, FOCIL and encrypted mempools could address different censorship points in Ethereum's transaction pipeline.

Stronger statelessness can require users to reveal which pieces of state they need before execution, potentially creating new privacy challenges. Buterin's state research explicitly recognizes that new scalable state models will therefore need to be evaluated alongside Ethereum's privacy goals.

If applications can use Ethereum-style accounts when they need flexibility, UTXOs when they need scalable and largely independent state transitions, and cryptographic aggregation when individual verification becomes too expensive, Ethereum could potentially increase throughput without simply multiplying the burden placed on every node.

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