The Cat proposal is an early draft debated in Bitcoin developer forums in late December 2025 that would mark certain historical small unspent transaction outputs (UTXOs) as permanently unspendable to reduce UTXO bloat. The debate is framed as a choice between a targeted technical efficiency fix and an unprecedented consensus-layer intervention with meaningful implications for custodians, treasuries, and node operators.
What The Cat targets and how it would work
The Cat focuses on so-called non-monetary UTXOs (NMUs), described as very small outputs typically under 1,000 satoshis that carry inscription data from protocols such as Ordinals and Bitcoin Stamps and originate within a defined historical window. Because every full node maintains the UTXO set as the canonical database for validating spendable balances, any forced change to which outputs are considered spendable is inherently a consensus-level decision. Under the draft, a pinned external indexer would identify the specific historical outputs and nodes would treat them as unspendable, enabling those entries to be pruned from the active UTXO set. This design explicitly relies on an external reference set to define which outputs are invalidated, which is central to why the proposal is controversial.
Proponents argue the change could reduce the UTXO database by an estimated 30% to 50%, improving sync times and lowering node memory requirements. Supporters therefore position The Cat as a narrowly scoped efficiency measure aimed at curbing UTXO bloat associated with non-economic inscriptions.
The proposal remains at the discussion-draft stage and has not entered the formal Bitcoin Improvement Proposal (BIP) process. With no defined activation path, the draft is currently a conceptual governance and engineering debate rather than an implementable roadmap. Any consensus change of this nature would require broad alignment across developers, miners, node operators, and other stakeholders before it could be deployed. In practice, its viability depends on whether the ecosystem converges on both legitimacy and an activation mechanism.
Why it is dividing the community
The Cat has split participants across technical, philosophical, and legal-leaning fault lines. Critics argue the mechanism amounts to confiscation and violates Bitcoin’s permissionless design, with one prominent developer calling it “tantamount to theft.” Opponents also warn that the precedent could normalize future targeted changes and expand the scope of consensus-layer intervention. The precedent risk is framed as potentially more consequential than the one-time pruning benefit.
Technical objections emphasize that the rule would only cover a defined historical set and may not prevent future inscription activity. This raises the concern that The Cat could become a recurring escalation rather than a durable fix if similar bloat patterns re-emerge. Supporters counter that the proposal is a pragmatic response to blockchain “bloat” from non-economic inscriptions and argue that market or protocol incentives have not slowed rapid UTXO growth. The argument, as presented, is that operational cost externalities justify a narrowly tailored intervention.
The urgency of the debate is contextualized by rapid UTXO growth: the UTXO set is described as having doubled to over 160 million entries in 2023, with a significant portion consisting of dust-sized outputs. This scale is used to justify why efficiency and node resource requirements are now governance-grade issues.
Alternative concepts are also discussed alongside The Cat, notably Lynx, which uses time and size thresholds rather than content. Under Lynx, dust-sized UTXOs that remain unmoved for four years would become invalid, avoiding reliance on external indexers but raising operational risk for long-dormant legitimate holdings. Lynx is positioned as reducing subjective classification risk while increasing the probability of collateral impact on dormant, but valid, owners.
The key watch items are whether The Cat is formally submitted as a BIP and whether developer discussions and node-operator signaling coalesce around an activation path. The immediate priority is governance monitoring and scenario planning around any consensus proposal that could alter asset accessibility. The practical issue is not just efficiency, but whether new invalidation rules introduce non-zero probability of stranded assets under certain classification regimes.