UTXO stands for unspent transaction output. It's how Bitcoin, Litecoin, and other similar blockchains keep track of your balance. UTXOs affect things like privacy, fees, and the structure of your transactions.
In this article:
What are UTXOs?
A UTXO (unspent transaction output) is an individual chunk of crypto that you can spend. A key feature is that this chunk can’t be partially spent. You must use the full amount, similar to paying with a single bill and receiving change back.
For instance, if someone gives you a $10 bill, that’s like one UTXO. When you spend $5, you hand over the $10, and the cashier gives you $5 back as a new bill. Those $5 bills, one to the cashier and one back to you, represent new UTXOs.
Bitcoin and some other blockchains use the UTXO model to calculate your balance by adding up all your unspent UTXOs, even if they’re spread across multiple addresses.
This model works differently from account-based blockchains, such as Ethereum. Account-based blockchains are similar to bank accounts, where your balance increases or decreases as you make transactions.
What does a UTXO transaction look like?
When you make a transaction on a UTXO-based blockchain network, your wallet gathers one or more of your unspent UTXOs (called inputs) and uses them to create new UTXOs (called outputs).
Inputs are the UTXOs you're spending
Outputs are the new UTXOs created to send to the new destination
For example, suppose you have a single UTXO worth 1 BTC and want to send 0.3 BTC.
a) Your wallet spends one input (one UTXO worth 1 BTC). The transaction creates two new outputs: b) one UTXO worth 0.3 BTC sent to the person you're paying, and c) one UTXO worth 0.69995854 BTC returned to your wallet as leftover change. d) A network fee of 4,146 sats is paid to the miners (note that transaction fees fluctuate).
A UTXO of 0.69995854 BTC is returned to your wallet. This is sent to a change address, which is an address in your wallet created to receive change.
In Exodus, change returns to the same address by default. If you enable multiple addresses, Exodus will use a new change address each time (for supported assets) to improve your privacy. To learn more, visit: How do I enable multiple addresses?
How are UTXOs tied to addresses?
Each UTXO is linked to the blockchain address where it was received. On a block explorer like mempool.space, you can look up an address and see the individual UTXOs it holds.
The example below shows an address having a) received two transactions of multiple smaller UTXOs (0.1 BTC each). b) The confirmed address balance is 0.8 BTC, which is made up of c) the two unspent UTXOs, one worth 0.3 BTC and the other 0.5 BTC.
Additionally, since the UTXO model allows one wallet to manage multiple addresses, your wallet balance is made up of all the UTXOs linked to the different addresses within your wallet.
Wallets use an extended public key (xpub) to track all the addresses associated with it. This allows the wallet to display your total balance in one place, even though it’s spread across multiple addresses. To learn more, visit How do I export my xpub or zpub?
How do UTXOs affect your transactions?
UTXOs can impact the privacy, fees, and efficiency of your transactions:
Privacy and security | Because UTXOs are tied to addresses, your wallet can improve privacy by spreading activity across multiple addresses instead of showing one large balance.
In Exodus, with multiple addresses enabled, any leftover change is sent to a new change address when you make a transaction. Future deposits also use new addresses, making it harder for others to link your payments together.
To learn more, visit:
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Fees | Each UTXO you spend adds data to a transaction. The more UTXOs your wallet needs to combine, the larger the transaction will be, and the higher the fees will be.
For example, if you frequently receive many small payments, such as mining payouts, your wallet may later need to combine multiple small UTXOs into one transaction. This increases the transaction size and can result in higher network fees.
To learn more about this, visit:
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Managing UTXOs | Batching outputs: While many UTXOs can increase fees, batching allows your wallet to send multiple payments in a single transaction rather than creating separate ones for each recipient. This reduces the overall transaction size compared to sending them individually, lowering fees.
In Exodus, batching is currently only supported with Bitcoin (BTC). To learn more, visit:
Consolidating UTXOs: You can combine all your received UTXOs into one. This reduces the number of UTXOs in your wallet, making future transactions simpler and fees cheaper. To learn more, visit:
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Which UTXO-based assets are supported in Exodus?
The following assets supported in Exodus use the UTXO model:
Bitcoin (BTC)
Bitcoin Cash (BCH)
Bitcoin SV (BSV)
Dash (DASH)
Decred (DCR)
Digibyte (DGB)
Dogecoin (DOGE)
Litecoin (LTC)
Ravencoin (RVN)
Zcash (ZEC)