cardano

UTxO Model (Critical Difference)

• Cardano uses UTxO like Bitcoin, not accounts like Ethereum — each transaction consumes and creates outputs
• Wallet balance is sum of all UTxOs — not a single account balance
• Transaction fees depend on size — more inputs/outputs = higher fee
• Change outputs created automatically — transactions consume full UTxOs and return change
• Minimum UTxO value required — can't create outputs below threshold (currently ~1 ADA)

Transaction Characteristics

• Transactions are deterministic — you know exact fee before submitting
• No failed transactions that consume fees — if it fails, no fee charged
• Multi-asset transactions native — send ADA and tokens in same transaction
• Metadata can be attached — up to 16KB of arbitrary data

Native Tokens

• Tokens are first-class citizens — not smart contracts, native protocol support
• Minting requires policy script — defines who can mint/burn and when
• Tokens must be sent with minimum ADA — tokens can't exist alone in UTxO
• Policy ID identifies the token — verify policy ID for authenticity
• Burning requires same policy script — time-locked policies can't burn after deadline

Staking

• Non-custodial staking — ADA stays in your wallet, fully liquid
• Delegate to stake pools — no minimum, no lockup
• Rewards every epoch (5 days) — automatic, no claiming required
• First rewards appear after 15-20 days — registration and reward delay
• Pool saturation affects rewards — overly popular pools give diminishing returns

Choosing Stake Pools

• Pool margin is operator's cut — lower isn't always better, quality matters
• Fixed cost (340 ADA minimum) taken before margin — affects small delegators more
• Pledge shows operator commitment — higher pledge often indicates reliability
• Check pool uptime and block production — missed blocks mean missed rewards
• Avoid pools near saturation — rewards decrease above saturation point

Wallets

• Daedalus is full node wallet — downloads entire blockchain, most secure
• Yoroi is light wallet — faster, browser extension available
• Hardware wallet support — Ledger and Trezor via compatible software
• 15 or 24 word seed phrases — don't mix formats between wallets
• Staking key separate from spending key — can stake without exposing full access

Smart Contracts (Plutus)

• eUTxO model extends UTxO with data and scripts — different from Ethereum EVM
• Transactions must be built off-chain — then submitted to chain
• Deterministic execution — same inputs always produce same outputs
• Higher collateral requirements — locked ADA returned if transaction succeeds
• Script size affects fees — optimize for smaller scripts

Common Transaction Issues

• "Insufficient funds for fee" — need more ADA than just transfer amount
• "Minimum UTxO not met" — output too small, must include more ADA
• "UTxO too fragmented" — many small UTxOs, consolidate with self-transfer
• "Collateral required" — smart contract interaction needs collateral UTxO
• "Transaction too large" — too many inputs, split into multiple transactions

Network and Epochs

• Epoch is 5 days — staking rewards and protocol updates follow epoch boundaries
• Slot every 1 second — blocks approximately every 20 seconds
• Hard forks via Hard Fork Combinator — seamless upgrades without chain splits
• Testnet (preprod, preview) for development — free test ADA from faucets

Security

• Seed phrase is everything — never share, never enter online
• Verify transaction details on hardware wallet screen — software can lie
• Check policy IDs for tokens — scam tokens can have same name as legitimate ones
• DApp connections don't expose seed — only public key and signing requests
• Stake pool changes take effect after epoch boundary — not instant

NFTs and Metadata

• NFTs are native tokens with quantity 1 — no special contract needed
• CIP-25 standard for NFT metadata — JSON metadata with image links
• Metadata stored on-chain — permanent and verifiable
• IPFS commonly used for images — verify IPFS pinning is permanent
• jpg.store, cnft.io for marketplace — verify NFT policies before buying

Governance

• Voltaire era introducing on-chain governance — ADA holders vote on proposals
• Project Catalyst for treasury funding — community-voted grants
• Constitutional Committee, DReps — delegated representation coming
• Staking and governance participation can overlap — same ADA, different roles