Brief introduction to Cardano's eUTxO accounting model

Cardano uses the extended UTxO accounting model.

EUTxO differs from Ethereum’s account-based model. In Ethereum’s model, everyone has an account with a balance. When funds are transferred from one account to another, then balances are updated.

The ‘E’ in EUTxO stands for extended, improving on Bitcoin’s UTxO. Whereas UTxO smart contracts only interact with immediate requests to confirm a transaction, Cardano’s EUTxO model improves on this.

Learn more about EUTxO here

:bulb:To better understand EUTxO, read about how it supports multiassets and smart contracts

EUTxO is a transaction mechanism combining:

  • Smart contracts: these lock-up UTxOs, ADA, native assets & NFTs.

  • Redeemers: user-supplied data provided to unlock locked assets & spend them.

  • Datum: data such as a high score, user information or other information relevant to your app

  • Context: information like metadata about the transaction being validated

Plutus Core scripts can be checked to enable the confirmation of whether a tx will validate in your wallet before it goes on-chain.

Essentially protecting you from having to pay tx fees if your transaction fails.

This [Twitter] thread is part of a series on understanding Plutus and the upcoming June HF improvements.

If you’d like to recap what we’ve discussed before, check out our initial thread here

And if you’d like to know more, check out John Alan Woods’ Plutus explainer video here



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