What Is a Cardano Native Token? Policy IDs, Min-ADA and Minting Explained

A Cardano native token is a digital asset that the Cardano ledger tracks directly, using the same rules it uses for ADA. There is no smart contract that "is" the token; instead a minting policy says when units may be created or destroyed, and the token is identified everywhere by that policy's ID plus a name. Everything else people find confusing about Cardano tokens (the ADA that travels with them, why a name proves nothing, why some supplies are fixed and some are not) follows from that one design choice. Source: the Cardano ledger FAQ, checked September 5, 2026.

Native vs contract tokens

On Ethereum a token such as an ERC-20 is a contract that keeps a table of balances; sending tokens means calling that contract, and the contract's bugs are your bugs. On Cardano the ledger itself is multi-asset: a transaction output can hold ADA and any mix of tokens, and the ledger's own accounting checks that nothing is created or lost in a transfer. The practical differences for a holder:

• Sending a token is a normal transaction with a normal fee. There is no per-token contract execution.
• A wallet cannot be drained by "approving" a token contract, because there is nothing to approve.
• A token cannot be frozen or edited by its creator after the fact, unless the minting policy allows more minting or burning.

Policy ID + name = the token's identity

A token is named by two things: the policy ID (the hash of its minting policy, 56 hex characters) and an asset name (up to 32 bytes, often the ticker). The ticker and logo you see in a wallet come from a registry (CIP-26) or from CIP-68 on-chain metadata, and both are things a scammer can copy. The policy ID is not. $CATSKY, for example, is policy 9b426921a21f54600711da0be1a12b026703a9bd8eb9848d08c9d921 copy with asset name CATSKY; that string is the only thing that makes it the real one. Our tools guide lists the explorers where you can look any policy ID up.

Min-ADA: why tokens carry ADA with them

Every output on Cardano must hold a minimum amount of ADA, calculated from the output's size in bytes. An ADA-only output needs roughly 1 ADA; an output that also carries tokens needs somewhat more, and the amount rises with the number of different tokens and the length of their names. This is a deposit against ledger bloat, not a fee: the ADA stays in your wallet, travels with the tokens, and is freed when the tokens are sold or consolidated. It is why "send me 100 CATSKY" always costs the sender a little ADA on top, and why a wallet with zero spare ADA cannot send tokens at all.

Minting policies: single-signer, multisig, time-lock

The minting policy is a small script that says who can mint or burn units of the token and until when. The common shapes are a single key (the issuer can always mint more), a multisig (several keys must agree) and a time-lock (minting is allowed only before a given slot). Once a time-locked policy expires, the supply is fixed for good; no one can add or remove a single unit, including the creator. Burning follows the same policy and also requires actually holding the tokens being burned, so a project cannot destroy tokens out of your wallet.

A worked example: $CATSKY

CATSKY was minted on April 25, 2023 in one transaction of 999,999,999,997 units under a policy that was time-locked to June 16, 2023. Since that date the supply cannot change. Everything the project does with its treasury, including the on-chain buybacks we publish, happens with existing tokens, which is why every buyback is a wallet-to-wallet transaction anyone can trace. The numbers are on the tokenomics page and in what a token buyback is; the swap steps are on how to buy $CATSKY.

Nothing here is financial advice. Figures are dated because Cardano moves fast; re-check the linked source before you act on a number.