Presenting Cavefish

Summary:

• Problem addressed: traditional light clients for blockchains like Cardano and Bitcoin face trust issues, high data demands, and inefficiencies, especially for mobile or low-resource users relying on centralized services.
• Introducing Cavefish: a communication-optimal protocol from Input | Output for UTXO-based blockchains, enabling users to send intents (eg, ‘send 10 ada’) to a service provider who builds and verifies transactions with minimal data exchange.
• How it works: a light client submits an intent to a service provider, which creates a blinded transaction for the client to verify and sign, using privacy-preserving cryptography and automatic fee handling.
• Think of it like ordering a custom meal – the user shares their preferences, the chef prepares the meal without revealing the final dish, the user approves, and the tip is added automatically.
• This process lowers entry barriers, reduces trust in third parties, incentivizes decentralization, integrates with tools like Mithril, and supports payments, token minting, and decentralized finance.
• Cavefish is currently in its early inception phase. Milestones include work on protocol specifications, prototypes, security analyses, and the CIP.

In the world of blockchain technology, not everyone can run a full node – a powerful computer that downloads and verifies the entire blockchain history. This is where ‘light clients’ come in: lightweight apps (including wallets) designed for smartphones, internet of things (IoT) devices, or other systems with limited resources. However, traditional light clients often struggle with trust issues, high data demands, and inefficiency when building transactions. 

Input | Output (IO) introduces Cavefish – an innovative protocol that's set to change that.

The challenge of blockchain on the go

Blockchains are like massive, ever-growing digital ledgers. As they expand – with Cardano's upcoming features like Leios, for example – it becomes harder for everyday users to participate without powerful hardware. Many developers and users rely on centralized data services instead, which undermines the decentralized spirit of blockchain. Cavefish addresses this by enabling secure, low-effort interactions, making it easier for mobile users and decentralized application (DApp) builders to send transactions without having to sync the whole chain.

What is Cavefish?

Cavefish is a communication-optimal light client protocol specifically designed for UTXO-based blockchains (such as Cardano and Bitcoin). It allows users to describe what they want to do – such as ‘send 10 ada to a friend’ or ‘mint a new token’ – without knowing the current ledger state. A ‘service provider’ (SP), typically a full node operator, handles the details, building the transaction and automatically receiving a small fee.

The magic lies in its two-party system: the light client (LC) sends an ‘intent’, the SP constructs a blinded (hidden) version of the transaction, and the LC verifies it matches their request before signing. This ensures privacy and prevents cheating –  the LC can't alter the transaction to skip the fee, and the SP can't mislead the user. It's all done with minimal messages, thanks to smart cryptography like weakly blind predicate signatures, which keep things private until the transaction hits the blockchain.

Cavefish integrates with tools like hierarchical wallets, where one key unlocks multiple addresses, keeping communication super light.

How does it work? A simple analogy

Think of Cavefish like ordering a custom meal through a trusted chef. You tell the chef your preferences (the intent), they prepare it in the kitchen (build the transaction), show you a masked preview to confirm it's right (blinded verification), and you approve it. The chef gets tipped automatically, and the meal is served (transaction posted). No need for you to shop for ingredients or cook – perfect for when you're on the move.

This process uses advanced yet efficient math to verify everything securely, with benchmarks showing that even the most intensive parts (such as proofs) run in seconds on everyday hardware, making it ready for real-world use on Cardano or Bitcoin.

Why Cavefish matters

Cavefish lowers barriers to entry, fostering broader adoption. It minimizes reliance on third parties, boosts decentralization by incentivizing SPs, and integrates seamlessly with payment channels for even faster off-chain transactions. For Cardano, it complements tools like Mithril, reducing reliance on centralized APIs like Blockfrost. Ultimately, it empowers users to manage wallets, execute simple smart contracts, and engage with decentralized finance (DeFi) without high costs or complexity.

Where it stands today

As of November 2025, Cavefish is in its early inception phase at IO's research team. Progress includes reviewing the foundational paper, planning prototypes, and analyzing skill needs. Upcoming milestones include work on a protocol specification, incentive and security analyses, formalized requirements, a prototype, and a Cardano Improvement Proposal (CIP). The team is using tools like Circom for benchmarking and Agda for security proofs, targeting use cases like payments and token minting.

Cavefish isn't just tech – it's a step toward a more inclusive blockchain world. Stay tuned for updates as this project evolves.