Layertree Proposal Aims to Scale Bitcoin via Tree-Based Structures
New proposal enables millions to share a single Bitcoin output without sacrificing self-custody.
1Shared Bitcoin Output Architecture
Lightning Labs developer Olaoluwa Osuntokun introduced Layertree on October 15, 2026, proposing a method to consolidate millions of Bitcoin owners into a single unspent transaction output. This structure allows users to maintain individual balances tracked via off-chain mathematical records, effectively decoupling user ownership from the blockchain's native UTXO storage requirements.
2Merkle-Sum Tree Verification Mechanism
The system employs a Merkle-sum tree to track individual balances while maintaining cryptographic verifiability. This mathematical record ensures that Bitcoin can validate ownership without storing every account individually on-chain. It functions similarly to an apartment building, where a common roof covers many distinct units, managed without the operator owning assets.
3Covenant-Driven Self-Custody Security
Layertree ensures users retain control of their funds through Bitcoin covenants. These rules allow participants to submit mathematical proofs to withdraw their bitcoin independently. Because the operator cannot seize funds or block valid withdrawals, the system preserves the core principle of self-custody while leveraging a shared, more efficient blockchain output.
4Transaction Fee Efficiency Metrics
The proposal quantifies efficiency by comparing virtual bytes (vB) usage. Individual withdrawals require approximately 1,020 vB, which is significantly lower than the 2,511 vB needed for Ark-style withdrawals. Furthermore, group enrollment costs are optimized to less than 1 vB per person, assuming a system capacity of 65,536 total available positions.
5Operational Constraints and Admission
While Layertree prevents operators from blocking withdrawals, it grants them control over admission. Operators can refuse to let new members join the shared output. This creates a centralized entry point for a decentralized system, where the operator manages the infrastructure but lacks the technical authority to censor existing participant funds.
6Congestion Risks During Exits
The shared nature of the output introduces significant risks during periods of high demand. Because thousands of users share a single output, simultaneous withdrawal attempts create competition for limited transaction space. This potential for network congestion represents the primary bottleneck for the system when many participants decide to exit at once.
7Mandatory Protocol Scripting Changes
Layertree cannot function under Bitcoin's current scripting rules. The design requires the activation of new, proposed capabilities, specifically advanced covenant instructions that are not yet part of the protocol. Although Osuntokun has verified portions of the design, the complete system remains dependent on future consensus-level upgrades to the Bitcoin network.
8Future Implementation and Security
The proposal presents a trade-off between blockchain space efficiency and exit-time reliability. While it offers a path for millions to share costs, users must verify mathematical records independently to ensure fund accessibility. Future success depends on both the activation of necessary protocol changes and managing the inherent risks of shared outputs.
Original article: Bitcoin News — Layertree Proposal Aims to Scale Bitcoin via Tree-Based Structures