The minimum-ada rule prevents the ledger from filling up with dust outputs and tiny native-token amounts that would otherwise cost the network more to store than they were worth. Wallets compute the required minimum at transaction-construction time as (160 + serialized size of the output) × utxoCostPerByte, where the fixed 160-byte overhead accounts for the transaction input and the output's entry in the UTxO map, then ensure the output carries at least that much ada alongside any tokens.
Because the deposit is refundable on spend, holding many small UTxOs simply ties up ada temporarily rather than burning it.
Explore next
- UTXOUnspent Transaction Output, the accounting model Cardano shares with Bitcoin where transactions consume whole earlier outputs and create new ones, similar to spending banknotes and getting change back.View term
- eUTXOCardano's extension of the UTXO accounting model; each output can carry datum and script logic, so smart contracts express rules without the shared mutable state used by account-based chains.View term
- Native TokenA token created and managed directly on the Cardano blockchain using its built-in token functionality, without requiring smart contracts.View term
- adaThe native cryptocurrency of the Cardano blockchain, used to pay transaction fees, stake to a pool, and represent voting power in governance.View term