I have a wallet with 0.1XMR in it. I did a test transaction of 0.00001XMR, which I sent to another address owned by an exchange.
After sending this tiny transaction, my unlocked balance went from 0.1 to 0.
I need to be able to transfer many small amounts of XMR, as I am running a faucet service. Why is my total balance now locked, and how do I prevent this in the future?
It's not a case of how much is in your wallet, rather how many outputs you own. If you only have 1 output, when you do a transfer, the recipient get's a new output with part of your spend output and you get the rest into a new change output. This answer explains nicely.
So this brings us to the question of how to prevent this. There is no way to prevent the locking of funds in the above scenario. However, what you can of course do is batch your transfers. If you need to send money to multiple people within the confirmation time (locked time), both commands transfer and transfer_split allow sending to multiple people in the same transaction.
If you want to have multiple Outputs in your wallet you can use the "sweep_all" command in the monero-wallet-cli
sweep_all [index=<N1>[,<N2>,...]] [<priority>] [<ring_size>] [outputs=<N>] <address> [<payment_id (obsolete)>]
but outputs cannot be larger than 16!
example:
sweep_all unimportant outputs=16 521XfrBEKcHShFdd6d9bFGF58AGwESavq2Pcf47uteLT6d7NqMDnZbzPnjqGbwP8wTRm8FC55QV78bZbsxcWEaP4KBQNTcp
