If many people need to access this global state, and that state is stored in the datum of a single UTXO, it creates a race among users to be the first to spend that UTXO. Each time someone wins that race, it resets everyone else back to square one: they have to find the new UTXO, construct a new transaction, and submit it.

Many people have pointed out that Cardano’s choice of eUTXO can create issues when porting protocols. This is certainly true; we alluded to this in our <a href="https://sundaeswap.finance/papers/SundaeSwap-2021-06-01-Fundamentals.pdf">whitepaper </a>many months ago. Similarly Lars Brünjes, the Director of Education at IOG, <a href="https://twitter.com/LarsBrunjes/status/1403761666383306757">has tweeted about it </a>, and many others along with him.

Cardano chose, instead, to improve on the UTXO model enough that dApps themselves could make these tradeoffs between independent operation and centralization. The eUTXO model that Cardano led the research on introduces three new primitives for smart contracts: The datum, the redeemer, and the validator.

Cardano and eUTXO

Misconception 1 : Cardano is flawed because it only allows 1 transaction per block.In fact, it is quite the opposite. Cardano allows many hundreds of transactions per block.Instead, it is accurate to say that Cardano allows a given transaction output to be spent a single time, by a single transaction, so protocols that give multiple people access to the same UTXO might face contention issues

Misconception 2 : Only one user can interact with a smart contract per block/transaction.Also not true; the point of contention is around the UTXO, but many UTXOs may be governed by the same smart contract.This fundamentally comes down to the shift in thinking from Ethereum, where you call into a smart contract to make it do something, and Cardano where you lock outputs with a contract, which determine when they can later be spent.

The difference between these two can be analogized to the difference between the cash in your pocket and the balance in your bank account. Access to global information, such as price, is trivial in these models. However, there are a lot of downstream negative side effects of this choice.

btc vs eth transaction differences

Misconception 3 : The only way to solve this is through centralization.Centralization is a way to solve this problem, but it is not the only way. See below.

Today, there appear to be two categories of solutions to this problem: either design your protocol to tolerate segmentation of your state, or aggregate interactions with that state.

Potential Solutions

We’ve chosen a solution that differs from those above; Very soon we will be ready to pull back the curtain and reveal how it works. Given the nature of the recent discussion, we want to do so with receipts, and are currently preparing load tests to demonstrate exactly how well our scaling solution lives up to the task. Stay tuned for more information!

SundaeSwap’s Solution

After months of testing with smaller groups, the Cardano public testnet was recently upgraded to support smart contracts. The surge of activity that followed included many dApp tests and experiments, with developers eager to perform a large-scale test and show off their hard work.

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