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. The spendable balance your wallet shows is simply the sum of the notes it can unlock. Staking rewards are the one exception: they accumulate in a separate reward account, and withdrawing them into a note is itself a transaction.

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. The other is rejected as a whole, even if it passed every check when it was built, and nothing is half-applied. 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, as of 2026, that is 155,381 lovelace plus 44 lovelace per byte, so a typical transfer of a few hundred bytes costs around 0.17 ada. Like every protocol parameter, these values can change through governance. 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, so that the ledger does not fill up with dust. The minimum depends on the size of the output: roughly one ada for a plain ada-only output, more when it carries tokens or data. 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 deposit, currently 2 ada, 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 tracks them directly, much as it tracks 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. Ada keeps its special roles: only ada pays fees and deposits, only ada is paid out as staking rewards, and every output that carries tokens has to hold some ada as well.

An NFT is simply a token minted with a quantity of one under a policy that will never mint that asset again. What the token stands for, an image or a name for example, is usually described by metadata, and standards such as CIP-25 and CIP-68 define how wallets and marketplaces read it.

A smart contract on Cardano is a validator: a script that checks a transaction and answers one question, valid or not. Most often it guards outputs and decides whether a transaction may spend them, but scripts also govern minting and burning tokens, withdrawing rewards, certificates and, since the Chang upgrade, governance votes and proposals. 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 Aiken and Plinth 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. The app or wallet normally evaluates a script before asking for a signature, so failures on chain are rare. If a script still fails there, a small collateral covers the network's work, which is why wallets that connect to DApps set aside some 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 a hard fork is itself a governance action: it is proposed on chain and enacted only after the constitutional committee, delegated representatives and stake pool operators have each approved it. Protocol parameters such as fees and block size change through the same on-chain process, though which of the three bodies has to vote depends on the type of action. See how governance works.

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