UTXO consolidation refers to the process of combining multiple unspent transaction outputs (UTXOs) into fewer outputs. Each UTXO represents a specific amount of cryptocurrency that can be spent in future transactions. Over time, as a user engages in many transactions, their wallet may accumulate numerous small UTXOs.Having many small UTXOs can lead to inefficiencies. When making a transaction, each UTXO needs to be referenced, which can result in higher transaction fees, longer confirmation times, and potential delays. By consolidating UTXOs, users can streamline their wallets, making them simpler and potentially cheaper to transact with.To consolidate UTXOs, a user typically initiates a transaction that sends funds from multiple small UTXOs into a single or fewer outputs. This process may involve sending coins to oneself. While consolidation can reduce long-term transaction fees, it’s usually best done at times when network fees are low, to avoid additional costs.