🧩Auto Defragmentation

The Problem

Blockchains using the UTXO ledger model track token balances as one or more discrete outputs. Over time, it is not uncommon that a account can accumulate a large number of very small outputs. This is known as UTXO fragmentation. While this ledger model provides many benefits, a common drawback of UTXO fragmentation is the increased number of inputs required to transact. This may cause transaction fees to be higher and smart contracts to require more memory, and can often cause dApp interactions to fail due to execution budgets being exceeded, requiring the account owner to manually consolidate their UTXOs as a remedy.

The Solution

The Pond Smart Account enables automated UTXO consolidation for all token balances. With the help of DORA, the decentralized backend for transaction processing, smart accounts can be automatically defragmented in a decentralized manner as and when required. A small fee of 1 ADA is charged to cover the transaction fee and maintain an incentive for the continued operation of the service.

Note: this is not enabled by default but can be enabled through the dApp interface and requires an explicity signature of this intent.