diff --git a/pkg/core/blockchain.go b/pkg/core/blockchain.go
index ab72791fc..20b6ca120 100644
--- a/pkg/core/blockchain.go
+++ b/pkg/core/blockchain.go
@@ -86,7 +86,7 @@ type headersOpFunc func(headerList *HeaderHashList)
 func NewBlockchain(s storage.Store, cfg config.ProtocolConfiguration) (*Blockchain, error) {
 	bc := &Blockchain{
 		config:        cfg,
-		dao:           &dao{store: storage.NewMemCachedStore(s)},
+		dao:           newDao(s),
 		headersOp:     make(chan headersOpFunc),
 		headersOpDone: make(chan struct{}),
 		stopCh:        make(chan struct{}),
@@ -344,7 +344,7 @@ func (bc *Blockchain) processHeader(h *Header, batch storage.Batch, headerList *
 // is happening here, quite allot as you can see :). If things are wired together
 // and all tests are in place, we can make a more optimized and cleaner implementation.
 func (bc *Blockchain) storeBlock(block *Block) error {
-	cache := &dao{store: storage.NewMemCachedStore(bc.dao.store)}
+	cache := newCachedDao(bc.dao.store)
 	if err := cache.StoreAsBlock(block, 0); err != nil {
 		return err
 	}
@@ -505,7 +505,7 @@ func (bc *Blockchain) storeBlock(block *Block) error {
 			v.LoadScript(t.Script)
 			err := v.Run()
 			if !v.HasFailed() {
-				_, err := systemInterop.dao.store.Persist()
+				_, err := systemInterop.dao.Persist()
 				if err != nil {
 					return errors.Wrap(err, "failed to persist invocation results")
 				}
@@ -554,7 +554,7 @@ func (bc *Blockchain) storeBlock(block *Block) error {
 			}
 		}
 	}
-	_, err := cache.store.Persist()
+	_, err := cache.Persist()
 	if err != nil {
 		return err
 	}
@@ -567,7 +567,7 @@ func (bc *Blockchain) storeBlock(block *Block) error {
 }
 
 // processOutputs processes transaction outputs.
-func processOutputs(tx *transaction.Transaction, dao *dao) error {
+func processOutputs(tx *transaction.Transaction, dao *cachedDao) error {
 	for index, output := range tx.Outputs {
 		account, err := dao.GetAccountStateOrNew(output.ScriptHash)
 		if err != nil {
@@ -588,7 +588,7 @@ func processOutputs(tx *transaction.Transaction, dao *dao) error {
 	return nil
 }
 
-func processTXWithValidatorsAdd(output *transaction.Output, account *state.Account, dao *dao) error {
+func processTXWithValidatorsAdd(output *transaction.Output, account *state.Account, dao *cachedDao) error {
 	if output.AssetID.Equals(governingTokenTX().Hash()) && len(account.Votes) > 0 {
 		for _, vote := range account.Votes {
 			validatorState, err := dao.GetValidatorStateOrNew(vote)
@@ -604,7 +604,7 @@ func processTXWithValidatorsAdd(output *transaction.Output, account *state.Accou
 	return nil
 }
 
-func processTXWithValidatorsSubtract(account *state.Account, dao *dao, toSubtract util.Fixed8) error {
+func processTXWithValidatorsSubtract(account *state.Account, dao *cachedDao, toSubtract util.Fixed8) error {
 	for _, vote := range account.Votes {
 		validator, err := dao.GetValidatorStateOrNew(vote)
 		if err != nil {
@@ -624,7 +624,7 @@ func processTXWithValidatorsSubtract(account *state.Account, dao *dao, toSubtrac
 	return nil
 }
 
-func processValidatorStateDescriptor(descriptor *transaction.StateDescriptor, dao *dao) error {
+func processValidatorStateDescriptor(descriptor *transaction.StateDescriptor, dao *cachedDao) error {
 	publicKey := &keys.PublicKey{}
 	err := publicKey.DecodeBytes(descriptor.Key)
 	if err != nil {
@@ -645,7 +645,7 @@ func processValidatorStateDescriptor(descriptor *transaction.StateDescriptor, da
 	return nil
 }
 
-func processAccountStateDescriptor(descriptor *transaction.StateDescriptor, dao *dao) error {
+func processAccountStateDescriptor(descriptor *transaction.StateDescriptor, dao *cachedDao) error {
 	hash, err := util.Uint160DecodeBytesBE(descriptor.Key)
 	if err != nil {
 		return err
@@ -690,7 +690,7 @@ func (bc *Blockchain) persist() error {
 		err       error
 	)
 
-	persisted, err = bc.dao.store.Persist()
+	persisted, err = bc.dao.Persist()
 	if err != nil {
 		return err
 	}
@@ -1156,7 +1156,7 @@ func (bc *Blockchain) GetStandByValidators() (keys.PublicKeys, error) {
 // GetValidators returns validators.
 // Golang implementation of GetValidators method in C# (https://github.com/neo-project/neo/blob/c64748ecbac3baeb8045b16af0d518398a6ced24/neo/Persistence/Snapshot.cs#L182)
 func (bc *Blockchain) GetValidators(txes ...*transaction.Transaction) ([]*keys.PublicKey, error) {
-	cache := &dao{store: storage.NewMemCachedStore(bc.dao.store)}
+	cache := newCachedDao(bc.dao.store)
 	if len(txes) > 0 {
 		for _, tx := range txes {
 			// iterate through outputs
@@ -1249,14 +1249,10 @@ func (bc *Blockchain) GetValidators(txes ...*transaction.Transaction) ([]*keys.P
 	for i := 0; i < uniqueSBValidators.Len() && result.Len() < count; i++ {
 		result = append(result, uniqueSBValidators[i])
 	}
-	_, err = cache.store.Persist()
-	if err != nil {
-		return nil, err
-	}
 	return result, nil
 }
 
-func processStateTX(dao *dao, tx *transaction.StateTX) error {
+func processStateTX(dao *cachedDao, tx *transaction.StateTX) error {
 	for _, desc := range tx.Descriptors {
 		switch desc.Type {
 		case transaction.Account:
@@ -1272,7 +1268,7 @@ func processStateTX(dao *dao, tx *transaction.StateTX) error {
 	return nil
 }
 
-func processEnrollmentTX(dao *dao, tx *transaction.EnrollmentTX) error {
+func processEnrollmentTX(dao *cachedDao, tx *transaction.EnrollmentTX) error {
 	validatorState, err := dao.GetValidatorStateOrNew(&tx.PublicKey)
 	if err != nil {
 		return err
@@ -1340,8 +1336,8 @@ func (bc *Blockchain) GetScriptHashesForVerifying(t *transaction.Transaction) ([
 func (bc *Blockchain) spawnVMWithInterops(interopCtx *interopContext) *vm.VM {
 	vm := vm.New()
 	vm.SetScriptGetter(func(hash util.Uint160) []byte {
-		cs := bc.GetContractState(hash)
-		if cs == nil {
+		cs, err := interopCtx.dao.GetContractState(hash)
+		if err != nil {
 			return nil
 		}
 		return cs.Script
diff --git a/pkg/core/cacheddao.go b/pkg/core/cacheddao.go
new file mode 100644
index 000000000..d58acdedf
--- /dev/null
+++ b/pkg/core/cacheddao.go
@@ -0,0 +1,82 @@
+package core
+
+import (
+	"github.com/CityOfZion/neo-go/pkg/core/state"
+	"github.com/CityOfZion/neo-go/pkg/core/storage"
+	"github.com/CityOfZion/neo-go/pkg/util"
+)
+
+// cachedDao is a data access object that mimics dao, but has a write cache
+// for accounts and read cache for contracts. These are the most frequently used
+// objects in the storeBlock().
+type cachedDao struct {
+	dao
+	accounts  map[util.Uint160]*state.Account
+	contracts map[util.Uint160]*state.Contract
+}
+
+// newCachedDao returns new cachedDao wrapping around given backing store.
+func newCachedDao(backend storage.Store) *cachedDao {
+	accs := make(map[util.Uint160]*state.Account)
+	ctrs := make(map[util.Uint160]*state.Contract)
+	return &cachedDao{*newDao(backend), accs, ctrs}
+}
+
+// GetAccountStateOrNew retrieves Account from cache or underlying Store
+// or creates a new one if it doesn't exist.
+func (cd *cachedDao) GetAccountStateOrNew(hash util.Uint160) (*state.Account, error) {
+	if cd.accounts[hash] != nil {
+		return cd.accounts[hash], nil
+	}
+	return cd.dao.GetAccountStateOrNew(hash)
+}
+
+// GetAccountState retrieves Account from cache or underlying Store.
+func (cd *cachedDao) GetAccountState(hash util.Uint160) (*state.Account, error) {
+	if cd.accounts[hash] != nil {
+		return cd.accounts[hash], nil
+	}
+	return cd.dao.GetAccountState(hash)
+}
+
+// PutAccountState saves given Account in the cache.
+func (cd *cachedDao) PutAccountState(as *state.Account) error {
+	cd.accounts[as.ScriptHash] = as
+	return nil
+}
+
+// GetContractState returns contract state from cache or underlying Store.
+func (cd *cachedDao) GetContractState(hash util.Uint160) (*state.Contract, error) {
+	if cd.contracts[hash] != nil {
+		return cd.contracts[hash], nil
+	}
+	cs, err := cd.dao.GetContractState(hash)
+	if err == nil {
+		cd.contracts[hash] = cs
+	}
+	return cs, err
+}
+
+// PutContractState puts given contract state into the given store.
+func (cd *cachedDao) PutContractState(cs *state.Contract) error {
+	cd.contracts[cs.ScriptHash()] = cs
+	return cd.dao.PutContractState(cs)
+}
+
+// DeleteContractState deletes given contract state in cache and backing Store.
+func (cd *cachedDao) DeleteContractState(hash util.Uint160) error {
+	cd.contracts[hash] = nil
+	return cd.dao.DeleteContractState(hash)
+}
+
+// Persist flushes all the changes made into the (supposedly) persistent
+// underlying store.
+func (cd *cachedDao) Persist() (int, error) {
+	for sc := range cd.accounts {
+		err := cd.dao.PutAccountState(cd.accounts[sc])
+		if err != nil {
+			return 0, err
+		}
+	}
+	return cd.dao.Persist()
+}
diff --git a/pkg/core/cacheddao_test.go b/pkg/core/cacheddao_test.go
new file mode 100644
index 000000000..9020fc73e
--- /dev/null
+++ b/pkg/core/cacheddao_test.go
@@ -0,0 +1,83 @@
+package core
+
+import (
+	"testing"
+
+	"github.com/CityOfZion/neo-go/pkg/core/state"
+	"github.com/CityOfZion/neo-go/pkg/core/storage"
+	"github.com/CityOfZion/neo-go/pkg/crypto/hash"
+	"github.com/CityOfZion/neo-go/pkg/internal/random"
+	"github.com/CityOfZion/neo-go/pkg/smartcontract"
+	"github.com/stretchr/testify/require"
+)
+
+func TestCachedDaoAccounts(t *testing.T) {
+	store := storage.NewMemoryStore()
+	// Persistent DAO to check for backing storage.
+	pdao := newDao(store)
+	// Cached DAO.
+	cdao := newCachedDao(store)
+
+	hash := random.Uint160()
+	_, err := cdao.GetAccountState(hash)
+	require.NotNil(t, err)
+
+	acc, err := cdao.GetAccountStateOrNew(hash)
+	require.Nil(t, err)
+	_, err = pdao.GetAccountState(hash)
+	require.NotNil(t, err)
+
+	acc.Version = 42
+	require.NoError(t, cdao.PutAccountState(acc))
+	_, err = pdao.GetAccountState(hash)
+	require.NotNil(t, err)
+
+	acc2, err := cdao.GetAccountState(hash)
+	require.Nil(t, err)
+	require.Equal(t, acc, acc2)
+
+	acc2, err = cdao.GetAccountStateOrNew(hash)
+	require.Nil(t, err)
+	require.Equal(t, acc, acc2)
+
+	_, err = cdao.Persist()
+	require.Nil(t, err)
+
+	acct, err := pdao.GetAccountState(hash)
+	require.Nil(t, err)
+	require.Equal(t, acc, acct)
+}
+
+func TestCachedDaoContracts(t *testing.T) {
+	store := storage.NewMemoryStore()
+	dao := newCachedDao(store)
+
+	script := []byte{0xde, 0xad, 0xbe, 0xef}
+	sh := hash.Hash160(script)
+	_, err := dao.GetContractState(sh)
+	require.NotNil(t, err)
+
+	cs := &state.Contract{}
+	cs.Name = "test"
+	cs.Script = script
+	cs.ParamList = []smartcontract.ParamType{1, 2}
+
+	require.NoError(t, dao.PutContractState(cs))
+	cs2, err := dao.GetContractState(sh)
+	require.Nil(t, err)
+	require.Equal(t, cs, cs2)
+
+	_, err = dao.Persist()
+	require.Nil(t, err)
+	dao2 := newCachedDao(store)
+	cs2, err = dao2.GetContractState(sh)
+	require.Nil(t, err)
+	require.Equal(t, cs, cs2)
+
+	require.NoError(t, dao.DeleteContractState(sh))
+	cs2, err = dao2.GetContractState(sh)
+	require.Nil(t, err)
+	require.Equal(t, cs, cs2)
+	_, err = dao.GetContractState(sh)
+	require.NotNil(t, err)
+}
diff --git a/pkg/core/dao.go b/pkg/core/dao.go
index 1a0c8cea3..d570d5e3e 100644
--- a/pkg/core/dao.go
+++ b/pkg/core/dao.go
@@ -19,6 +19,10 @@ type dao struct {
 	store *storage.MemCachedStore
 }
 
+func newDao(backend storage.Store) *dao {
+	return &dao{store: storage.NewMemCachedStore(backend)}
+}
+
 // GetAndDecode performs get operation and decoding with serializable structures.
 func (dao *dao) GetAndDecode(entity io.Serializable, key []byte) error {
 	entityBytes, err := dao.store.Get(key)
@@ -51,9 +55,6 @@ func (dao *dao) GetAccountStateOrNew(hash util.Uint160) (*state.Account, error)
 			return nil, err
 		}
 		account = state.NewAccount(hash)
-		if err = dao.PutAccountState(account); err != nil {
-			return nil, err
-		}
 	}
 	return account, nil
 }
@@ -147,9 +148,6 @@ func (dao *dao) GetUnspentCoinStateOrNew(hash util.Uint256) (*UnspentCoinState,
 		unspent = &UnspentCoinState{
 			states: []state.Coin{},
 		}
-		if err = dao.PutUnspentCoinState(hash, unspent); err != nil {
-			return nil, err
-		}
 	}
 	return unspent, nil
 }
@@ -185,9 +183,6 @@ func (dao *dao) GetSpentCoinsOrNew(hash util.Uint256) (*SpentCoinState, error) {
 		spent = &SpentCoinState{
 			items: make(map[uint16]uint32),
 		}
-		if err = dao.PutSpentCoinState(hash, spent); err != nil {
-			return nil, err
-		}
 	}
 	return spent, nil
 }
@@ -227,9 +222,6 @@ func (dao *dao) GetValidatorStateOrNew(publicKey *keys.PublicKey) (*state.Valida
 			return nil, err
 		}
 		validatorState = &state.Validator{PublicKey: publicKey}
-		if err = dao.PutValidatorState(validatorState); err != nil {
-			return nil, err
-		}
 	}
 	return validatorState, nil
 
@@ -551,3 +543,9 @@ func (dao *dao) IsDoubleSpend(tx *transaction.Transaction) bool {
 	}
 	return false
 }
+
+// Persist flushes all the changes made into the (supposedly) persistent
+// underlying store.
+func (dao *dao) Persist() (int, error) {
+	return dao.store.Persist()
+}
diff --git a/pkg/core/dao_test.go b/pkg/core/dao_test.go
index 5aa44fe9f..d747ddf19 100644
--- a/pkg/core/dao_test.go
+++ b/pkg/core/dao_test.go
@@ -15,7 +15,7 @@ import (
 )
 
 func TestPutGetAndDecode(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	serializable := &TestSerializable{field: random.String(4)}
 	hash := []byte{1}
 	err := dao.Put(serializable, hash)
@@ -40,18 +40,15 @@ func (t *TestSerializable) DecodeBinary(reader *io.BinReader) {
 }
 
 func TestGetAccountStateOrNew_New(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	hash := random.Uint160()
 	createdAccount, err := dao.GetAccountStateOrNew(hash)
 	require.NoError(t, err)
 	require.NotNil(t, createdAccount)
-	gotAccount, err := dao.GetAccountState(hash)
-	require.NoError(t, err)
-	require.Equal(t, createdAccount, gotAccount)
 }
 
 func TestPutAndGetAccountStateOrNew(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	hash := random.Uint160()
 	accountState := &state.Account{ScriptHash: hash}
 	err := dao.PutAccountState(accountState)
@@ -62,7 +59,7 @@ func TestPutAndGetAccountStateOrNew(t *testing.T) {
 }
 
 func TestPutAndGetAssetState(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	id := random.Uint256()
 	assetState := &state.Asset{ID: id, Owner: keys.PublicKey{}}
 	err := dao.PutAssetState(assetState)
@@ -73,8 +70,8 @@ func TestPutAndGetAssetState(t *testing.T) {
 }
 
 func TestPutAndGetContractState(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
-	contractState := &state.Contract{Script: []byte{}, ParamList:[]smartcontract.ParamType{}}
+	dao := newDao(storage.NewMemoryStore())
+	contractState := &state.Contract{Script: []byte{}, ParamList: []smartcontract.ParamType{}}
 	hash := contractState.ScriptHash()
 	err := dao.PutContractState(contractState)
 	require.NoError(t, err)
@@ -84,8 +81,8 @@ func TestPutAndGetContractState(t *testing.T) {
 }
 
 func TestDeleteContractState(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
-	contractState := &state.Contract{Script: []byte{}, ParamList:[]smartcontract.ParamType{}}
+	dao := newDao(storage.NewMemoryStore())
+	contractState := &state.Contract{Script: []byte{}, ParamList: []smartcontract.ParamType{}}
 	hash := contractState.ScriptHash()
 	err := dao.PutContractState(contractState)
 	require.NoError(t, err)
@@ -97,18 +94,15 @@ func TestDeleteContractState(t *testing.T) {
 }
 
 func TestGetUnspentCoinStateOrNew_New(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	hash := random.Uint256()
 	unspentCoinState, err := dao.GetUnspentCoinStateOrNew(hash)
 	require.NoError(t, err)
 	require.NotNil(t, unspentCoinState)
-	gotUnspentCoinState, err := dao.GetUnspentCoinState(hash)
-	require.NoError(t, err)
-	require.Equal(t, unspentCoinState, gotUnspentCoinState)
 }
 
 func TestGetUnspentCoinState_Err(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	hash := random.Uint256()
 	gotUnspentCoinState, err := dao.GetUnspentCoinState(hash)
 	require.Error(t, err)
@@ -116,9 +110,9 @@ func TestGetUnspentCoinState_Err(t *testing.T) {
 }
 
 func TestPutGetUnspentCoinState(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	hash := random.Uint256()
-	unspentCoinState := &UnspentCoinState{states:[]state.Coin{}}
+	unspentCoinState := &UnspentCoinState{states: []state.Coin{}}
 	err := dao.PutUnspentCoinState(hash, unspentCoinState)
 	require.NoError(t, err)
 	gotUnspentCoinState, err := dao.GetUnspentCoinState(hash)
@@ -127,20 +121,17 @@ func TestPutGetUnspentCoinState(t *testing.T) {
 }
 
 func TestGetSpentCoinStateOrNew_New(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	hash := random.Uint256()
 	spentCoinState, err := dao.GetSpentCoinsOrNew(hash)
 	require.NoError(t, err)
 	require.NotNil(t, spentCoinState)
-	gotSpentCoinState, err := dao.GetSpentCoinState(hash)
-	require.NoError(t, err)
-	require.Equal(t, spentCoinState, gotSpentCoinState)
 }
 
 func TestPutAndGetSpentCoinState(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	hash := random.Uint256()
-	spentCoinState := &SpentCoinState{items:make(map[uint16]uint32)}
+	spentCoinState := &SpentCoinState{items: make(map[uint16]uint32)}
 	err := dao.PutSpentCoinState(hash, spentCoinState)
 	require.NoError(t, err)
 	gotSpentCoinState, err := dao.GetSpentCoinState(hash)
@@ -149,7 +140,7 @@ func TestPutAndGetSpentCoinState(t *testing.T) {
 }
 
 func TestGetSpentCoinState_Err(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	hash := random.Uint256()
 	spentCoinState, err := dao.GetSpentCoinState(hash)
 	require.Error(t, err)
@@ -157,9 +148,9 @@ func TestGetSpentCoinState_Err(t *testing.T) {
 }
 
 func TestDeleteSpentCoinState(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	hash := random.Uint256()
-	spentCoinState := &SpentCoinState{items:make(map[uint16]uint32)}
+	spentCoinState := &SpentCoinState{items: make(map[uint16]uint32)}
 	err := dao.PutSpentCoinState(hash, spentCoinState)
 	require.NoError(t, err)
 	err = dao.DeleteSpentCoinState(hash)
@@ -170,18 +161,15 @@ func TestDeleteSpentCoinState(t *testing.T) {
 }
 
 func TestGetValidatorStateOrNew_New(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	publicKey := &keys.PublicKey{}
 	validatorState, err := dao.GetValidatorStateOrNew(publicKey)
 	require.NoError(t, err)
 	require.NotNil(t, validatorState)
-	gotValidatorState, err := dao.GetValidatorState(publicKey)
-	require.NoError(t, err)
-	require.Equal(t, validatorState, gotValidatorState)
 }
 
 func TestPutGetValidatorState(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	publicKey := &keys.PublicKey{}
 	validatorState := &state.Validator{
 		PublicKey:  publicKey,
@@ -196,7 +184,7 @@ func TestPutGetValidatorState(t *testing.T) {
 }
 
 func TestDeleteValidatorState(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	publicKey := &keys.PublicKey{}
 	validatorState := &state.Validator{
 		PublicKey:  publicKey,
@@ -213,7 +201,7 @@ func TestDeleteValidatorState(t *testing.T) {
 }
 
 func TestGetValidators(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	publicKey := &keys.PublicKey{}
 	validatorState := &state.Validator{
 		PublicKey:  publicKey,
@@ -228,9 +216,9 @@ func TestGetValidators(t *testing.T) {
 }
 
 func TestPutGetAppExecResult(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	hash := random.Uint256()
-	appExecResult := &state.AppExecResult{TxHash: hash, Events:[]state.NotificationEvent{}}
+	appExecResult := &state.AppExecResult{TxHash: hash, Events: []state.NotificationEvent{}}
 	err := dao.PutAppExecResult(appExecResult)
 	require.NoError(t, err)
 	gotAppExecResult, err := dao.GetAppExecResult(hash)
@@ -239,7 +227,7 @@ func TestPutGetAppExecResult(t *testing.T) {
 }
 
 func TestPutGetStorageItem(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	hash := random.Uint160()
 	key := []byte{0}
 	storageItem := &state.StorageItem{Value: []uint8{}}
@@ -250,7 +238,7 @@ func TestPutGetStorageItem(t *testing.T) {
 }
 
 func TestDeleteStorageItem(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	hash := random.Uint160()
 	key := []byte{0}
 	storageItem := &state.StorageItem{Value: []uint8{}}
@@ -263,7 +251,7 @@ func TestDeleteStorageItem(t *testing.T) {
 }
 
 func TestGetBlock_NotExists(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	hash := random.Uint256()
 	block, err := dao.GetBlock(hash)
 	require.Error(t, err)
@@ -271,7 +259,7 @@ func TestGetBlock_NotExists(t *testing.T) {
 }
 
 func TestPutGetBlock(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	block := &Block{
 		BlockBase: BlockBase{
 			Script: transaction.Witness{
@@ -289,14 +277,14 @@ func TestPutGetBlock(t *testing.T) {
 }
 
 func TestGetVersion_NoVersion(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	version, err := dao.GetVersion()
 	require.Error(t, err)
 	require.Equal(t, "", version)
 }
 
 func TestGetVersion(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	err := dao.PutVersion("testVersion")
 	require.NoError(t, err)
 	version, err := dao.GetVersion()
@@ -305,14 +293,14 @@ func TestGetVersion(t *testing.T) {
 }
 
 func TestGetCurrentHeaderHeight_NoHeader(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	height, err := dao.GetCurrentBlockHeight()
 	require.Error(t, err)
 	require.Equal(t, uint32(0), height)
 }
 
 func TestGetCurrentHeaderHeight_Store(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	block := &Block{
 		BlockBase: BlockBase{
 			Script: transaction.Witness{
@@ -329,7 +317,7 @@ func TestGetCurrentHeaderHeight_Store(t *testing.T) {
 }
 
 func TestStoreAsTransaction(t *testing.T) {
-	dao := &dao{store: storage.NewMemCachedStore(storage.NewMemoryStore())}
+	dao := newDao(storage.NewMemoryStore())
 	tx := &transaction.Transaction{}
 	hash := tx.Hash()
 	err := dao.StoreAsTransaction(tx, 0)
diff --git a/pkg/core/interop_neo.go b/pkg/core/interop_neo.go
index 31576d95a..44c55b225 100644
--- a/pkg/core/interop_neo.go
+++ b/pkg/core/interop_neo.go
@@ -172,8 +172,8 @@ func (ic *interopContext) txGetUnspentCoins(v *vm.VM) error {
 	if !ok {
 		return errors.New("value is not a transaction")
 	}
-	ucs := ic.bc.GetUnspentCoinState(tx.Hash())
-	if ucs == nil {
+	ucs, err := ic.dao.GetUnspentCoinState(tx.Hash())
+	if err != nil {
 		return errors.New("no unspent coin state found")
 	}
 	v.Estack().PushVal(vm.NewInteropItem(ucs))
@@ -200,10 +200,7 @@ func (ic *interopContext) txGetWitnesses(v *vm.VM) error {
 
 // bcGetValidators returns validators.
 func (ic *interopContext) bcGetValidators(v *vm.VM) error {
-	validators, err := ic.bc.GetValidators()
-	if err != nil {
-		return err
-	}
+	validators := ic.dao.GetValidators()
 	v.Estack().PushVal(validators)
 	return nil
 }
@@ -315,9 +312,9 @@ func (ic *interopContext) bcGetAccount(v *vm.VM) error {
 	if err != nil {
 		return err
 	}
-	acc := ic.bc.GetAccountState(acchash)
-	if acc == nil {
-		acc = state.NewAccount(acchash)
+	acc, err := ic.dao.GetAccountStateOrNew(acchash)
+	if err != nil {
+		return err
 	}
 	v.Estack().PushVal(vm.NewInteropItem(acc))
 	return nil
@@ -330,8 +327,8 @@ func (ic *interopContext) bcGetAsset(v *vm.VM) error {
 	if err != nil {
 		return err
 	}
-	as := ic.bc.GetAssetState(ashash)
-	if as == nil {
+	as, err := ic.dao.GetAssetState(ashash)
+	if err != nil {
 		return errors.New("asset not found")
 	}
 	v.Estack().PushVal(vm.NewInteropItem(as))
@@ -394,8 +391,8 @@ func (ic *interopContext) accountIsStandard(v *vm.VM) error {
 	if err != nil {
 		return err
 	}
-	contract := ic.bc.GetContractState(acchash)
-	res := contract == nil || vm.IsStandardContract(contract.Script)
+	contract, err := ic.dao.GetContractState(acchash)
+	res := err != nil || vm.IsStandardContract(contract.Script)
 	v.Estack().PushVal(res)
 	return nil
 }
@@ -413,7 +410,7 @@ func (ic *interopContext) storageFind(v *vm.VM) error {
 		return err
 	}
 	prefix := string(v.Estack().Pop().Bytes())
-	siMap, err := ic.bc.GetStorageItems(stc.ScriptHash)
+	siMap, err := ic.dao.GetStorageItems(stc.ScriptHash)
 	if err != nil {
 		return err
 	}
@@ -488,8 +485,8 @@ func (ic *interopContext) contractCreate(v *vm.VM) error {
 	if err != nil {
 		return nil
 	}
-	contract := ic.bc.GetContractState(newcontract.ScriptHash())
-	if contract == nil {
+	contract, err := ic.dao.GetContractState(newcontract.ScriptHash())
+	if err != nil {
 		contract = newcontract
 		err := ic.dao.PutContractState(contract)
 		if err != nil {
@@ -528,8 +525,8 @@ func (ic *interopContext) contractMigrate(v *vm.VM) error {
 	if err != nil {
 		return nil
 	}
-	contract := ic.bc.GetContractState(newcontract.ScriptHash())
-	if contract == nil {
+	contract, err := ic.dao.GetContractState(newcontract.ScriptHash())
+	if err != nil {
 		contract = newcontract
 		err := ic.dao.PutContractState(contract)
 		if err != nil {
@@ -537,7 +534,7 @@ func (ic *interopContext) contractMigrate(v *vm.VM) error {
 		}
 		if contract.HasStorage() {
 			hash := getContextScriptHash(v, 0)
-			siMap, err := ic.bc.GetStorageItems(hash)
+			siMap, err := ic.dao.GetStorageItems(hash)
 			if err != nil {
 				return err
 			}
@@ -729,8 +726,8 @@ func (ic *interopContext) assetRenew(v *vm.VM) error {
 	}
 	years := byte(v.Estack().Pop().BigInt().Int64())
 	// Not sure why C# code regets an asset from the Store, but we also do it.
-	asset := ic.bc.GetAssetState(as.ID)
-	if asset == nil {
+	asset, err := ic.dao.GetAssetState(as.ID)
+	if err != nil {
 		return errors.New("can't renew non-existent asset")
 	}
 	if asset.Expiration < ic.bc.BlockHeight()+1 {
@@ -741,7 +738,7 @@ func (ic *interopContext) assetRenew(v *vm.VM) error {
 		expiration = math.MaxUint32
 	}
 	asset.Expiration = uint32(expiration)
-	err := ic.dao.PutAssetState(asset)
+	err = ic.dao.PutAssetState(asset)
 	if err != nil {
 		return gherr.Wrap(err, "failed to store asset")
 	}
diff --git a/pkg/core/interop_system.go b/pkg/core/interop_system.go
index a399e67e7..91f919d32 100644
--- a/pkg/core/interop_system.go
+++ b/pkg/core/interop_system.go
@@ -68,8 +68,8 @@ func (ic *interopContext) bcGetContract(v *vm.VM) error {
 	if err != nil {
 		return err
 	}
-	cs := ic.bc.GetContractState(hash)
-	if cs == nil {
+	cs, err := ic.dao.GetContractState(hash)
+	if err != nil {
 		v.Estack().PushVal([]byte{})
 	} else {
 		v.Estack().PushVal(vm.NewInteropItem(cs))
@@ -100,18 +100,18 @@ func (ic *interopContext) bcGetHeight(v *vm.VM) error {
 
 // getTransactionAndHeight gets parameter from the vm evaluation stack and
 // returns transaction and its height if it's present in the blockchain.
-func getTransactionAndHeight(bc Blockchainer, v *vm.VM) (*transaction.Transaction, uint32, error) {
+func getTransactionAndHeight(cd *cachedDao, v *vm.VM) (*transaction.Transaction, uint32, error) {
 	hashbytes := v.Estack().Pop().Bytes()
 	hash, err := util.Uint256DecodeBytesLE(hashbytes)
 	if err != nil {
 		return nil, 0, err
 	}
-	return bc.GetTransaction(hash)
+	return cd.GetTransaction(hash)
 }
 
 // bcGetTransaction returns transaction.
 func (ic *interopContext) bcGetTransaction(v *vm.VM) error {
-	tx, _, err := getTransactionAndHeight(ic.bc, v)
+	tx, _, err := getTransactionAndHeight(ic.dao, v)
 	if err != nil {
 		return err
 	}
@@ -121,7 +121,7 @@ func (ic *interopContext) bcGetTransaction(v *vm.VM) error {
 
 // bcGetTransactionHeight returns transaction height.
 func (ic *interopContext) bcGetTransactionHeight(v *vm.VM) error {
-	_, h, err := getTransactionAndHeight(ic.bc, v)
+	_, h, err := getTransactionAndHeight(ic.dao, v)
 	if err != nil {
 		return err
 	}
@@ -254,7 +254,7 @@ func (ic *interopContext) engineGetScriptContainer(v *vm.VM) error {
 func getContextScriptHash(v *vm.VM, n int) util.Uint160 {
 	ctxIface := v.Istack().Peek(n).Value()
 	ctx := ctxIface.(*vm.Context)
-	return hash.Hash160(ctx.Program())
+	return ctx.ScriptHash()
 }
 
 // pushContextScriptHash pushes to evaluation stack the script hash of the
@@ -383,8 +383,8 @@ func (ic *interopContext) runtimeDeserialize(v *vm.VM) error {
 }
 */
 func (ic *interopContext) checkStorageContext(stc *StorageContext) error {
-	contract := ic.bc.GetContractState(stc.ScriptHash)
-	if contract == nil {
+	contract, err := ic.dao.GetContractState(stc.ScriptHash)
+	if err != nil {
 		return errors.New("no contract found")
 	}
 	if !contract.HasStorage() {
@@ -535,16 +535,16 @@ func (ic *interopContext) contractDestroy(v *vm.VM) error {
 		return errors.New("can't destroy contract when not triggered by application")
 	}
 	hash := getContextScriptHash(v, 0)
-	cs := ic.bc.GetContractState(hash)
-	if cs == nil {
+	cs, err := ic.dao.GetContractState(hash)
+	if err != nil {
 		return nil
 	}
-	err := ic.dao.DeleteContractState(hash)
+	err = ic.dao.DeleteContractState(hash)
 	if err != nil {
 		return err
 	}
 	if cs.HasStorage() {
-		siMap, err := ic.bc.GetStorageItems(hash)
+		siMap, err := ic.dao.GetStorageItems(hash)
 		if err != nil {
 			return err
 		}
diff --git a/pkg/core/interops.go b/pkg/core/interops.go
index 33fac36c6..f249e0299 100644
--- a/pkg/core/interops.go
+++ b/pkg/core/interops.go
@@ -19,12 +19,12 @@ type interopContext struct {
 	trigger       byte
 	block         *Block
 	tx            *transaction.Transaction
-	dao           *dao
+	dao           *cachedDao
 	notifications []state.NotificationEvent
 }
 
 func newInteropContext(trigger byte, bc Blockchainer, s storage.Store, block *Block, tx *transaction.Transaction) *interopContext {
-	dao := &dao{store: storage.NewMemCachedStore(s)}
+	dao := newCachedDao(s)
 	nes := make([]state.NotificationEvent, 0)
 	return &interopContext{bc, trigger, block, tx, dao, nes}
 }
diff --git a/pkg/core/mem_pool.go b/pkg/core/mem_pool.go
index d9e489c0f..a01793a5d 100644
--- a/pkg/core/mem_pool.go
+++ b/pkg/core/mem_pool.go
@@ -269,12 +269,15 @@ func min(sortedPool PoolItems) *PoolItem {
 // GetVerifiedTransactions returns a slice of Input from all the transactions in the memory pool
 // whose hash is not included in excludedHashes.
 func (mp *MemPool) GetVerifiedTransactions() []*transaction.Transaction {
-	var t []*transaction.Transaction
-
 	mp.lock.RLock()
 	defer mp.lock.RUnlock()
+
+	var t = make([]*transaction.Transaction, len(mp.unsortedTxn))
+	var i int
+
 	for _, p := range mp.unsortedTxn {
-		t = append(t, p.txn)
+		t[i] = p.txn
+		i++
 	}
 
 	return t
diff --git a/pkg/core/state/account.go b/pkg/core/state/account.go
index d1a016d6c..12522b0d4 100644
--- a/pkg/core/state/account.go
+++ b/pkg/core/state/account.go
@@ -49,8 +49,11 @@ func (s *Account) DecodeBinary(br *io.BinReader) {
 	for i := 0; i < int(lenBalances); i++ {
 		key := util.Uint256{}
 		br.ReadBytes(key[:])
-		ubs := make([]UnspentBalance, 0)
-		br.ReadArray(&ubs)
+		len := int(br.ReadVarUint())
+		ubs := make([]UnspentBalance, len)
+		for j := 0; j < len; j++ {
+			ubs[j].DecodeBinary(br)
+		}
 		s.Balances[key] = ubs
 	}
 }
@@ -65,7 +68,10 @@ func (s *Account) EncodeBinary(bw *io.BinWriter) {
 	bw.WriteVarUint(uint64(len(s.Balances)))
 	for k, v := range s.Balances {
 		bw.WriteBytes(k[:])
-		bw.WriteArray(v)
+		bw.WriteVarUint(uint64(len(v)))
+		for i := range v {
+			v[i].EncodeBinary(bw)
+		}
 	}
 }
 
diff --git a/pkg/vm/context.go b/pkg/vm/context.go
index bf42b4440..f1d5899df 100644
--- a/pkg/vm/context.go
+++ b/pkg/vm/context.go
@@ -1,9 +1,11 @@
 package vm
 
 import (
+	"encoding/binary"
 	"errors"
 
-	"github.com/CityOfZion/neo-go/pkg/io"
+	"github.com/CityOfZion/neo-go/pkg/crypto/hash"
+	"github.com/CityOfZion/neo-go/pkg/util"
 	"github.com/CityOfZion/neo-go/pkg/vm/opcode"
 )
 
@@ -29,8 +31,13 @@ type Context struct {
 
 	// Alt stack pointer.
 	astack *Stack
+
+	// Script hash of the prog.
+	scriptHash util.Uint160
 }
 
+var errNoInstParam = errors.New("failed to read instruction parameter")
+
 // NewContext returns a new Context object.
 func NewContext(b []byte) *Context {
 	return &Context{
@@ -44,33 +51,44 @@ func NewContext(b []byte) *Context {
 // its invocation the instruction pointer points to the instruction being
 // returned.
 func (c *Context) Next() (opcode.Opcode, []byte, error) {
+	var err error
+
 	c.ip = c.nextip
 	if c.ip >= len(c.prog) {
 		return opcode.RET, nil, nil
 	}
-	r := io.NewBinReaderFromBuf(c.prog[c.ip:])
 
-	var instrbyte = r.ReadB()
+	var instrbyte = c.prog[c.ip]
 	instr := opcode.Opcode(instrbyte)
 	c.nextip++
 
 	var numtoread int
 	switch instr {
 	case opcode.PUSHDATA1, opcode.SYSCALL:
-		var n = r.ReadB()
-		numtoread = int(n)
-		c.nextip++
-	case opcode.PUSHDATA2:
-		var n = r.ReadU16LE()
-		numtoread = int(n)
-		c.nextip += 2
-	case opcode.PUSHDATA4:
-		var n = r.ReadU32LE()
-		if n > MaxItemSize {
-			return instr, nil, errors.New("parameter is too big")
+		if c.nextip >= len(c.prog) {
+			err = errNoInstParam
+		} else {
+			numtoread = int(c.prog[c.nextip])
+			c.nextip++
+		}
+	case opcode.PUSHDATA2:
+		if c.nextip+1 >= len(c.prog) {
+			err = errNoInstParam
+		} else {
+			numtoread = int(binary.LittleEndian.Uint16(c.prog[c.nextip : c.nextip+2]))
+			c.nextip += 2
+		}
+	case opcode.PUSHDATA4:
+		if c.nextip+3 >= len(c.prog) {
+			err = errNoInstParam
+		} else {
+			var n = binary.LittleEndian.Uint32(c.prog[c.nextip : c.nextip+4])
+			if n > MaxItemSize {
+				return instr, nil, errors.New("parameter is too big")
+			}
+			numtoread = int(n)
+			c.nextip += 4
 		}
-		numtoread = int(n)
-		c.nextip += 4
 	case opcode.JMP, opcode.JMPIF, opcode.JMPIFNOT, opcode.CALL, opcode.CALLED, opcode.CALLEDT:
 		numtoread = 2
 	case opcode.CALLI:
@@ -87,11 +105,14 @@ func (c *Context) Next() (opcode.Opcode, []byte, error) {
 			return instr, nil, nil
 		}
 	}
-	parameter := make([]byte, numtoread)
-	r.ReadBytes(parameter)
-	if r.Err != nil {
-		return instr, nil, errors.New("failed to read instruction parameter")
+	if c.nextip+numtoread-1 >= len(c.prog) {
+		err = errNoInstParam
 	}
+	if err != nil {
+		return instr, nil, err
+	}
+	parameter := make([]byte, numtoread)
+	copy(parameter, c.prog[c.nextip:c.nextip+numtoread])
 	c.nextip += numtoread
 	return instr, parameter, nil
 }
@@ -125,6 +146,14 @@ func (c *Context) Program() []byte {
 	return c.prog
 }
 
+// ScriptHash returns a hash of the script in the current context.
+func (c *Context) ScriptHash() util.Uint160 {
+	if c.scriptHash.Equals(util.Uint160{}) {
+		c.scriptHash = hash.Hash160(c.prog)
+	}
+	return c.scriptHash
+}
+
 // Value implements StackItem interface.
 func (c *Context) Value() interface{} {
 	return c
diff --git a/pkg/vm/vm.go b/pkg/vm/vm.go
index 0b488f83f..5d784e83e 100644
--- a/pkg/vm/vm.go
+++ b/pkg/vm/vm.go
@@ -129,8 +129,8 @@ func (v *VM) RegisterInteropFunc(name string, f InteropFunc, price int) {
 // the VM. Effectively it's a batched version of RegisterInteropFunc.
 func (v *VM) RegisterInteropFuncs(interops map[string]InteropFuncPrice) {
 	// We allow reregistration here.
-	for name, funPrice := range interops {
-		v.interop[name] = funPrice
+	for name := range interops {
+		v.interop[name] = interops[name]
 	}
 }