Background

The deterministic nature of Cardano blockchain transactions is a fundamental aspect that ensures predictability and security within the network. In the context of Cardano's extended Unspent Transaction Output (eUTXO) model, a deterministic transaction is one that will become invalid if the input state to it changes for the data it interacts with. This means that the outcome of the transaction is uniquely determined by its input state, without any additional input or dependency on external factors such as block hash or timestamp.

This deterministic validation is crucial because it allows users to predict the impact and outcome of a transaction before its actual execution on the blockchain. It also ensures that there are no unexpected script validation outcomes or failures and that the fees associated with the transaction are predictable. This predictability is in contrast to account-based blockchains like Ethereum, where transactions are indeterministic and can be influenced by other network activity, affecting the gas cost and the predictability of transactions.

The deterministic transaction processing model in Cardano, while offering predictability and security, also presents several challenges. These issues primarily stem from the eUTxO model's inherent limitations in handling concurrency and the complexities it introduces in transaction and contract management.