I am bumping this thread to formally propose that all Stacks transactions that currently use an “unspendable address” for “burn” transactions be updated to use an OP_RETURN output instead.
As I describe in the OP, unspendable burn addresses create a negative externality on all bitcoin users by bloating the UTXO set. (In a recent discussion about another protocol that uses unspendable addresses, numerous Bitcoin Core devs called usage of such unspendable addresses “harmful” to bitcoin.) In contrast, OP_RETURN outputs do not bloat the UTXO set, and are therefore considered the “correct” or at least “bitcoin-friendly” way to burn BTC.
If there are no strong technical objections to this proposal then I will move on to drafting a SIP for its implementation.
Appendix A. Rationale for the status quo
One may reasonably ask: why does Stacks use an unspendable burn address rather than an OP_RETURN output to begin with? When asked that very question here on this forum, @jude answered that it is because when he was first designing the system in 2015, he didn’t know OP_RETURN could be used to burn BTC.
In light of the knowledge that OP_RETURN can theoretically replace the use of burn addresses, we can now ask: is there anything that practically stops Stacks from using OP_RETURN instead of burn addresses today?
One thing could be Bitcoin Core standardness/policy rules: for example, if Stacks needs to have multiple OP_RETURN burn outputs in a single transaction, that would currently be a non-standard transaction. This would be useful to surface and communicate to the Bitcoin Core devs as they are actively reconsidering OP_RETURN standardness policies. If we need some non-standard OP_RETURN capability and can say that Stacks will (with some strong likelihood, given no ability to guarantee uptake by a decentralized network) take advantage of that change if/when it happens, then that would be another datapoint in favor of the change in Bitcoin Core and increase the likelihood that it actually happens, clearing the way for Stacks to make the switch to a less harmful burn mechanism.