Bitcoin Core Developers Plan October OP_RETURN Change: A Catalyst for Reviving Bitcoin’s Ecosystem?

By CryptoDavid & Cheryl L.

On June 10, Protos reported that Bitcoin Core developers have proposed a significant update to the Bitcoin network’s transaction relay policy, set to be implemented in October with Bitcoin Core Version 30. If adopted, this update will remove restrictions on OP_RETURN outputs containing large amounts of non-financial data, increasing the default data carrier size from 80 bytes to nearly 4MB. Additionally, node operators will gain the ability to manually adjust the -datacarrier and -datacarriersize parameters, offering greater flexibility for transaction processing.

In 2025, Bitcoin’s price has soared to new heights, recently hovering around $110,000. Traditional financial giants like BlackRock and national strategic reserve funds have embraced Bitcoin as a hedge asset, while major corporations are following Strategy’s lead in adopting Bitcoin as a strategic reserve. However, this institutional enthusiasm has not translated into robust activity on the Bitcoin network itself.

Declining On-Chain Activity: A Growing Concern

Bitcoin’s network transaction volume has plummeted, with The Block reporting a 7-day moving average of $317,000, the lowest in 19 months since October 2023. Back then, with Bitcoin priced at around $27,000, approximately 270,000 transactions were included in blocks weekly. Today, despite a price surge to $100,000, only 250,000 transactions are processed weekly. This figure pales in comparison to the peak in spring 2023, when the Ordinals protocol and BRC-20 tokens like $Ordi drove a surge in on-chain activity.

The data reflects Bitcoin’s growing role as “digital gold,” with holders prioritizing long-term storage over frequent transactions. While this bolsters Bitcoin’s store-of-value narrative, it poses challenges for miners, who rely on transaction fees to sustain operations. Following the 2024 halving, which reduced block rewards to 3.125 BTC, miners have increasingly depended on fees. Low transaction volumes have forced some miners to accept transactions with fees below 1 sat/vB to remain operational, a stark contrast to the fee spikes during the 2023 inscription boom.

The new Bitcoin Core proposal has sparked hope for a new narrative to reinvigorate the ecosystem. By adjusting transaction relay policies to allow more data on-chain, the update could breathe new life into Bitcoin’s network.

Bitcoin Core’s Proposal: Flexible Transaction Relay

The Bitcoin Core proposal, endorsed by 31 developers, advocates for a “flexible relay” policy that minimizes node interference with transactions, allowing those with economic demand to be relayed and included in blocks. This shift could significantly impact on-chain activity, miner revenue, and the inscription ecosystem by enabling a broader range of transactions, particularly those carrying non-financial data like inscriptions or BRC-20 tokens.

In Bitcoin’s network, transaction relay acts like a traffic coordinator, determining which transactions nodes propagate to miners for inclusion in blocks. Historically, strict relay rules often filtered out data-heavy transactions, such as inscriptions, due to their size or low fees. The new proposal seeks to loosen these restrictions, ensuring that transactions meeting economic demand — those miners are willing to include — are relayed without hindrance. This could improve the efficiency and diversity of transactions, particularly for data-intensive use cases.

Implications for OP_RETURN and the Inscription Ecosystem

The proposal’s implications are closely tied to OP_RETURN, a Bitcoin script opcode that allows users to embed small amounts of data in transactions. Currently limited to 80 bytes, OP_RETURN outputs are non-spendable and used for purposes like file hashes, NFT metadata, or BRC-20 token information. In spring 2023, the Ordinals protocol leveraged OP_RETURN and Taproot to enable inscription-based NFTs and tokens, sparking a wave of on-chain activity that temporarily overwhelmed the network and boosted miner fees.

However, the 80-byte limit has constrained OP_RETURN’s potential, preventing users from embedding larger data, such as high-resolution images or complex metadata, and limiting Bitcoin’s role as a decentralized data storage platform.

While the proposal does not explicitly mention OP_RETURN, its flexible relay principles could indirectly ease restrictions on this opcode, which allows non-financial data to be embedded in transactions. Key potential impacts include:

• Reduced Node Interference: Nodes will be less likely to filter transactions containing OP_RETURN data, provided they meet economic demand, improving their propagation.

• Pathway to Expanded Data Limits: The proposal’s spirit could pave the way for future discussions on increasing OP_RETURN’s 80-byte limit, potentially allowing larger data payloads.

• Enhanced Transaction Efficiency: Even without changing OP_RETURN’s data cap, the proposal could streamline the relay of data-heavy transactions, reducing failures due to node filtering.

The 2023 inscription boom demonstrated how data-intensive transactions, like those for BRC-20 tokens, drove miner fees to record highs. Relaxing OP_RETURN restrictions could encourage users to pay higher fees for complex data uploads, alleviating post-halving revenue pressures for miners and incentivizing support for the new policy.

Notably, the proposal’s implementation is relatively straightforward, as it modifies relay policies rather than Bitcoin’s consensus rules. Relay policies govern only whether nodes propagate transactions, not their validity, meaning users and miners can choose whether to adopt the updated Bitcoin Core version without affecting network consensus.

A Practical Example: Streamlining Data-Intensive Transactions

To illustrate the proposal’s impact, consider a user attempting to mint a high-resolution NFT on Bitcoin’s blockchain, requiring 200 bytes of metadata. Under current rules, this data must be split across multiple transactions, increasing costs and complexity. Nodes might also reject these transactions due to size, leading to failures. After the proposal’s implementation:

• Data Storage: The user could attach 200 bytes of data to a single transaction without splitting, simplifying the process.

• Node Propagation: Nodes would relay the transaction as long as sufficient fees are paid, reducing the risk of rejection.

• Miner Behavior: Miners would prioritize these transactions for their higher fees, boosting revenue.

• User and Miner Benefits: Users would enjoy a smoother experience with lower failure rates, while miners would see increased income, fostering a healthier ecosystem.

This shift could unlock new non-financial use cases, such as storing file hashes for tamper-proof records, expanding Bitcoin’s utility beyond its monetary function.

Community Reactions: Support and Skepticism

The proposal has sparked intense debate within the Bitcoin community. Supporters, like crypto KOL 0xTodd, argue it aligns with Satoshi Nakamoto’s vision of an unrestricted network, enabling miners to earn more from diverse transactions. 0xTodd noted that inscriptions, which pay fees based on size, are not “spam” and that allowing limited data storage is akin to engraving records on physical gold, a fitting analogy for Bitcoin as “digital gold.”

Opponents, however, fear that increased on-chain data could strain the network. Core developer Luke Dashjr responded with a “NACK” (non-acknowledgment) following the Bitcoin Core’s statement, arguing that the proposal prioritizes miner profits over network purity and risks enabling censorship by favoring certain transactions. Critics also worry about “spam transactions” clogging block space, with Glassnode data indicating that Bitcoin’s blockchain size, currently at 500GB, could grow rapidly, raising costs for full nodes and potentially reducing decentralization.

The debate is reflected in node distribution, with CoinDance reporting that 98.37% of nodes run Bitcoin Core, while 1.63% use alternative clients like Bitcoin Knots, which filter inscriptions. If the proposal passes, Knots users may resist, raising the risk of client fragmentation, reminiscent of the 2017 SegWit2x controversy that nearly split the network.

Looking Ahead: A Pivotal Moment for Bitcoin’s Ecosystem

The proposal’s fate hinges on community consensus, code reviews on GitHub, and node upgrade adoption. If approved, flexible relay could take effect within months, potentially ushering in a new wave of inscription activity and boosting miner revenue. However, unresolved divisions could prolong Bitcoin’s on-chain stagnation or even lead to a client fork.

This debate transcends Bitcoin’s price, focusing instead on the network’s role and functionality. Supporters see a path to innovation and economic vitality, while opponents defend Bitcoin’s monetary purity and decentralization. As the community navigates this crossroads, the outcome will shape whether Bitcoin’s ecosystem thaws into a new spring or remains in a prolonged winter.