Introduction
Ada is Cardano’s native currency. 1 ada = 1,000,000 lovelace, the smallest unit (named after Ada Lovelace).
What ada is used for
- Fees: every transaction pays a small fee in ada.
- Staking: delegated ada determines how blocks are produced and secures the network.
- Governance: ada-based voting power is what DReps and stake pool operators vote with; holders delegate it.
- Deposits: some actions require refundable deposits, e.g. 2 ada to register a stake key, 500 ada to register as a DRep (protocol parameters at epoch 665).
- Treasury: part of each epoch’s fees and monetary expansion goes to the Cardano treasury, which can only be spent through approved Treasury Withdrawal governance actions.
Native tokens
Cardano can carry other tokens (for example stablecoins or NFTs) natively, without a smart contract for basic transfers. Every UTxO holding tokens must also hold a minimum amount of ada.
Example
A wallet shows “Balance 12.5 ada”. Under the hood the ledger records 12,500,000 lovelace spread across one or more UTxOs.
Common mistakes
Confusing ada with a token that copies its name. Always check the asset is native ada (no policy ID).
Treating ada as an investment recommendation. This guide is educational and not financial advice.