Scalable UTXO smart contracts via fine-grained distributed state

Bartoletti, Massimo;Marchesin, Riccardo;Zunino, Roberto

2026-01-01

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Abstract

UTXO-based smart contract platforms face an efficiency bottleneck, in that any transaction sent to a contract must specify the entire updated contract state. This requirement becomes particularly burdensome when the contract state contains dynamic data structures, as needed in many use cases to track interactions between users and the contract. The problem is twofold: on the one hand, a large state in transactions implies a large transaction fee; on the other hand, a large centralized state is detrimental to the parallelization of transactions — a feature that is often cited as a key advantage of UTXO-based blockchains over account-based ones. We propose a novel UTXO-based blockchain model, named hybrid UTXO (hUTXO), along with a technique to efficiently execute smart contracts on it. The key idea underlying hUTXO is the distribution of the contract state across multiple UTXOs, enabling transactions to access only the specific portions of the state they need, thereby reducing their size (and fees). Our hUTXO model also borrows features from account-based models (in particular, the handling of the contract balance), making it “hybrid” in nature. To simplify the development of smart contracts in hUTXO, we introduce a high-level smart contract language (named hURF), along with a compiler into hUTXO transactions. We show how to exploit our framework to parallelize the validation of transactions on multi-core CPUs. We implement our technique and provide an empirical validation of its effectiveness.