On April 13, IOHK, the firm behind Cardano, released details that Plutus contracts will consist of parts that run on-chain and parts that run on a user’s machine off-chain.
Similar to Bitcoin blockchain, Cardano uses the UTXO model where the inputs are unspent outputs from the previous transactions. However, Cardano has also employed an extended UTXO model (EUTXO) that offers better advantages over other accounting models.
EUTXO allows the validity of transactions to be checked off-chain before the transaction are sent to the blockchain. Transaction execution costs can be also be determined off-chain before transmission.
The Plutus Core will define the parameters of these EUTXO transactions and compile the code developed for smart contracts. Plutus Core is the scripting language used by Cardano. While a Plutus Application Framework (PAF) will provide easy access to services and applications running on the network with full web browser interoperability.
Plutus is part of the Alonzo upgrade, a major upgrade stage on the Cardano roadmap that includes smart contracts and the ability to build dApps.
In an earlier blog post, the team earlier hinted at the smart contract upgrade, saying:
Cardano’s native ADA token is trading down by 2.34% at $1.46 at the time of writing. The cryptocurrency last hit an all-time high of $1.55 on April 14.