[BIP Proposal] Limit ScriptPubkey Size >= 520 Bytes Consensus.

The discussion revolves around the strategic embedding of data within Bitcoin's witness data to alleviate network load, a practice deemed more economical due to its minimal burden on the network, especially non-archival nodes. The ongoing debate concerning the policy limit on transaction filters, currently capped at 80 bytes, highlights an emerging trend of transactions exceeding this threshold, potentially leading to an increase in on-chain spam. The suggestion to introduce a hard consensus limit is presented as a preventative measure against future shifts in market sentiment that could lead to excessive use of data beyond the 520-byte mark, a strategy perceived as relatively harmless in safeguarding the network.

The utilization of OP_RETURN outputs for data embedding, despite its higher costs compared to witness data, underscores the lack of deterrents for such practices among users with low-load applications like OpenTimestamps. The proposal to enforce multiple outputs for data embedding aims to escalate costs for entities engaging in this activity, thereby imposing technical and financial constraints that could dissuade the preference for UTXO-set spam over witness spam. This approach is advocated as a means to amplify the cost differential significantly enough to deter spam activities that leverage block space competitively against protocols seeking network effects, such as LN or Ark.

Andrew Poelstra, Director of Blockstream Research, emphasizes the critical impact of spam on the blockchain ecosystem, particularly how it compromises the scalability and efficiency of protocols by monopolizing block space. By increasing the costs associated with spamming activities, there's a strategic effort to protect the network's integrity and ensure equitable access to block space, fostering an environment where innovative protocols can thrive without being overshadowed by spam transactions. For further insights, Poelstra can be reached through his email or visited at his website here.