Cardano uses the extended UTXO model, eUTXO for short. Instead of accounts with running balances, the ledger holds unspent transaction outputs: individual notes of value, each locked to an address. A transaction consumes whole notes as inputs and creates new notes as outputs, and the total in has to equal the total out plus the fee, with any remainder coming back to you as change. Your wallet balance is simply the sum of the notes you can unlock.

Two consequences matter for users. First, everything a transaction will do is fixed when it is built, so your wallet can tell you the exact outcome and fee before you sign. Second, a note can only be spent once, so if two transactions try to spend the same note, only one of them can succeed and the other is rejected. Applications design around this by splitting value across many notes or by batching, which is why some Cardano apps process orders in rounds rather than one by one.

The extended part is what makes programs possible: an output can carry data and be locked by a script instead of a key, and the script decides whether a transaction may spend it.

A fee is a formula, not an auction: a fixed part plus a per-byte part, both set by protocol parameters. On mainnet today that is 155,381 lovelace plus 44 lovelace per byte, so a typical transfer of a few hundred bytes costs around 0.17 ada. Fees do not rise when the network is busy, transactions simply wait a little longer.

Every output also has to hold a minimum amount of ada, roughly one ada for a simple output, so that the ledger does not fill up with dust. That ada is not a fee: it stays in the output and comes back when the output is spent. Registering a stake key takes a refundable 2 ada deposit for the same reason.

A block is produced roughly every 20 seconds, so a transaction usually appears on the chain within a minute. Wallets and exchanges then wait for more blocks on top before treating it as settled, typically a few minutes for everyday use and longer for large transfers.

Tokens on Cardano are native: the ledger handles them with the same rules as ada, so no smart contract is needed to create, send or hold them. A token is defined by a minting policy, a small script or key that says who may create or destroy it. Once minted, tokens travel inside ordinary transaction outputs, alongside ada, and a single transaction can carry many different assets.

An NFT is simply a token minted with a quantity of one under a policy that will not mint it again, plus metadata that describes it. Standards such as CIP-25 and CIP-68 define how wallets and marketplaces read that metadata.

A smart contract on Cardano is a validator: a script that guards outputs and answers one question for each transaction that tries to spend them, valid or not. The transaction itself is built by the user's wallet or the app, including every input, output and piece of data the script needs. The script cannot call other services or change its mind later, which keeps outcomes predictable.

Scripts are written in languages such as Plutus and Aiken and compiled to Plutus Core, the language the node executes. Their execution is paid for with a separate budget of memory and steps that is priced in advance, so the cost is known before submission, exactly like the base fee. If a script fails on chain despite the wallet's own check, a small collateral covers the network's work, which is why wallets set aside a few ada for that purpose.

Anyone can run a Cardano node. Stake pools are nodes that produce blocks, operated by individuals, companies and communities. Delegating ada to a pool increases its chance of being chosen and earns you a share of its rewards, without moving your ada anywhere. Rewards are paid every epoch from newly released reserve ada and from transaction fees.

The protocol rewards pools most when they stay below a saturation point, which discourages any single pool from growing too large, and pool operators pledge some of their own ada as a commitment. Close to three thousand pools are registered, and roughly a thousand produce blocks in a given epoch.

New nodes catch up with the chain either by replaying its full history or by starting from a signed snapshot produced by Mithril, a network of signers backed by the same stake distribution. If you would rather help produce blocks than delegate, you can run a stake pool yourself.

Cardano upgrades through hard forks, but without the chain splits the term usually implies. The hard fork combinator lets a single node understand every era of the protocol, so the switch from one set of rules to the next happens at an epoch boundary that everyone knows in advance. Each era added something: staking, native tokens, smart contracts, cheaper scripts, and on-chain governance.

Since 2025 an upgrade is itself a governance action: it is proposed on chain, voted on by delegated representatives, stake pool operators and the constitutional committee, and only then enacted. The same process changes protocol parameters such as fees and block size. See how governance works.

The words this page uses, each linked to its glossary entry.