diff --git a/polkadot/api/Cargo.toml b/polkadot/api/Cargo.toml
index 860536ac95..5a883cfd2c 100644
--- a/polkadot/api/Cargo.toml
+++ b/polkadot/api/Cargo.toml
@@ -11,6 +11,7 @@ polkadot-primitives = { path = "../primitives" }
 substrate-codec = { path = "../../substrate/codec" }
 substrate-runtime-io = { path = "../../substrate/runtime-io" }
 substrate-runtime-executive = { path  = "../../substrate/runtime/executive" }
+substrate-runtime-primitives = { path  = "../../substrate/runtime/primitives" }
 substrate-client = { path = "../../substrate/client" }
 substrate-primitives = { path = "../../substrate/primitives" }
 substrate-executor = { path = "../../substrate/executor" }
diff --git a/polkadot/api/src/full.rs b/polkadot/api/src/full.rs
index 101f59f5a7..a4203eac75 100644
--- a/polkadot/api/src/full.rs
+++ b/polkadot/api/src/full.rs
@@ -23,6 +23,8 @@ use polkadot_executor::Executor as LocalDispatch;
 use substrate_executor::{NativeExecutionDispatch, NativeExecutor};
 use state_machine;
 
+use runtime::Address;
+use runtime_primitives::traits::AuxLookup;
 use primitives::{AccountId, Block, Header, BlockId, Hash, Index, SessionKey, Timestamp, UncheckedExtrinsic};
 use primitives::parachain::{CandidateReceipt, DutyRoster, Id as ParaId};
 
@@ -135,7 +137,11 @@ impl<B: LocalBackend<Block>> PolkadotApi for Client<B, LocalCallExecutor<B, Nati
 	}
 
 	fn index(&self, at: &CheckedId, account: AccountId) -> Result<Index> {
-		with_runtime!(self, at, || ::runtime::System::account_index(account))
+		with_runtime!(self, at, || ::runtime::System::account_nonce(account))
+	}
+
+	fn lookup(&self, at: &Self::CheckedBlockId, address: Address) -> Result<Option<AccountId>> {
+		with_runtime!(self, at, || <::runtime::Staking as AuxLookup>::lookup(address).ok())
 	}
 
 	fn active_parachains(&self, at: &CheckedId) -> Result<Vec<ParaId>> {
diff --git a/polkadot/api/src/lib.rs b/polkadot/api/src/lib.rs
index c92f568f7b..81e3b02420 100644
--- a/polkadot/api/src/lib.rs
+++ b/polkadot/api/src/lib.rs
@@ -26,6 +26,7 @@ extern crate substrate_client as client;
 extern crate substrate_executor as substrate_executor;
 extern crate substrate_runtime_executive;
 extern crate substrate_primitives;
+extern crate substrate_runtime_primitives as runtime_primitives;
 extern crate substrate_state_machine as state_machine;
 
 #[macro_use]
@@ -37,7 +38,9 @@ extern crate substrate_keyring as keyring;
 pub mod full;
 pub mod light;
 
-use primitives::{AccountId, Block, BlockId, Hash, Index, SessionKey, Timestamp, UncheckedExtrinsic};
+use primitives::{AccountId, Block, BlockId, Hash, Index, SessionKey, Timestamp,
+	UncheckedExtrinsic};
+use runtime::Address;
 use primitives::parachain::{CandidateReceipt, DutyRoster, Id as ParaId};
 
 error_chain! {
@@ -119,9 +122,12 @@ pub trait PolkadotApi {
 	/// Get the timestamp registered at a block.
 	fn timestamp(&self, at: &Self::CheckedBlockId) -> Result<Timestamp>;
 
-	/// Get the index of an account at a block.
+	/// Get the nonce (né index) of an account at a block.
 	fn index(&self, at: &Self::CheckedBlockId, account: AccountId) -> Result<Index>;
 
+	/// Get the account id of an address at a block.
+	fn lookup(&self, at: &Self::CheckedBlockId, address: Address) -> Result<Option<AccountId>>;
+
 	/// Get the active parachains at a block.
 	fn active_parachains(&self, at: &Self::CheckedBlockId) -> Result<Vec<ParaId>>;
 
diff --git a/polkadot/api/src/light.rs b/polkadot/api/src/light.rs
index 560c186699..6a4f1f0322 100644
--- a/polkadot/api/src/light.rs
+++ b/polkadot/api/src/light.rs
@@ -22,6 +22,7 @@ use client::{Client, CallExecutor};
 use codec::Slicable;
 use state_machine;
 use primitives::{AccountId, Block, BlockId, Hash, Index, SessionKey, Timestamp, UncheckedExtrinsic};
+use runtime::Address;
 use primitives::parachain::{CandidateReceipt, DutyRoster, Id as ParaId};
 use full::CheckedId;
 use {PolkadotApi, BlockBuilder, RemotePolkadotApi, CheckedBlockId, Result, ErrorKind};
@@ -84,6 +85,10 @@ impl<B: Backend<Block>, E: CallExecutor<Block>> PolkadotApi for RemotePolkadotAp
 		Err(ErrorKind::UnknownRuntime.into())
 	}
 
+	fn lookup(&self, _at: &CheckedId, _address: Address) -> Result<Option<AccountId>> {
+		Err(ErrorKind::UnknownRuntime.into())
+	}
+
 	fn active_parachains(&self, _at: &Self::CheckedBlockId) -> Result<Vec<ParaId>> {
 		Err(ErrorKind::UnknownRuntime.into())
 	}
diff --git a/polkadot/consensus/src/lib.rs b/polkadot/consensus/src/lib.rs
index 2e23b256b2..6146e6d87d 100644
--- a/polkadot/consensus/src/lib.rs
+++ b/polkadot/consensus/src/lib.rs
@@ -72,6 +72,7 @@ use runtime_support::Hashable;
 use polkadot_api::PolkadotApi;
 use polkadot_primitives::{Hash, Block, BlockId, BlockNumber, Header, Timestamp};
 use polkadot_primitives::parachain::{Id as ParaId, Chain, DutyRoster, BlockData, Extrinsic as ParachainExtrinsic, CandidateReceipt};
+use polkadot_runtime::BareExtrinsic;
 use primitives::AuthorityId;
 use transaction_pool::{Ready, TransactionPool};
 use tokio_core::reactor::{Handle, Timeout, Interval};
@@ -502,9 +503,9 @@ impl<C, R, P> bft::Proposer<Block> for Proposer<C, R, P>
 		let mut next_index = {
 			let readiness_evaluator = Ready::create(self.parent_id.clone(), &*self.client);
 			let cur_index = self.transaction_pool.cull_and_get_pending(readiness_evaluator, |pending| pending
-				.filter(|tx| tx.as_ref().as_ref().signed == local_id)
+				.filter(|tx| tx.sender().map(|s| s == local_id).unwrap_or(false))
 				.last()
-				.map(|tx| Ok(tx.as_ref().as_ref().index))
+				.map(|tx| Ok(tx.index()))
 				.unwrap_or_else(|| self.client.index(&self.parent_id, local_id))
 			);
 
@@ -531,7 +532,7 @@ impl<C, R, P> bft::Proposer<Block> for Proposer<C, R, P>
 						=> MisbehaviorKind::BftDoubleCommit(round as u32, (h1, s1.signature), (h2, s2.signature)),
 				}
 			};
-			let extrinsic = Extrinsic {
+			let extrinsic = BareExtrinsic {
 				signed: local_id,
 				index: next_index,
 				function: Call::Consensus(ConsensusCall::report_misbehavior(report)),
@@ -540,7 +541,13 @@ impl<C, R, P> bft::Proposer<Block> for Proposer<C, R, P>
 			next_index += 1;
 
 			let signature = MaybeUnsigned(self.local_key.sign(&extrinsic.encode()).into());
-			let uxt = UncheckedExtrinsic { extrinsic, signature };
+
+			let extrinsic = Extrinsic {
+				signed: extrinsic.signed.into(),
+				index: extrinsic.index,
+				function: extrinsic.function,
+			};
+			let uxt = UncheckedExtrinsic::new(extrinsic, signature);
 
 			self.transaction_pool.import_unchecked_extrinsic(uxt)
 				.expect("locally signed extrinsic is valid; qed");
diff --git a/polkadot/parachain/test-chains/basic_add/src/lib.rs b/polkadot/parachain/test-chains/basic_add/src/lib.rs
index 1ef898f1dc..9d0a8a0d74 100644
--- a/polkadot/parachain/test-chains/basic_add/src/lib.rs
+++ b/polkadot/parachain/test-chains/basic_add/src/lib.rs
@@ -17,7 +17,7 @@
 //! Basic parachain that adds a number as part of its state.
 
 #![cfg_attr(not(feature = "std"), no_std)]
-#![cfg_attr(not(feature = "std"), feature(alloc, core_intrinsics, lang_items, panic_implementation))]
+#![cfg_attr(not(feature = "std"), feature(alloc, core_intrinsics, global_allocator, lang_items, panic_implementation, core_panic_info))]
 
 #[cfg(not(feature = "std"))]
 extern crate alloc;
diff --git a/polkadot/parachain/test-chains/basic_add/src/wasm.rs b/polkadot/parachain/test-chains/basic_add/src/wasm.rs
index 3af2dd39a9..edf53dc46f 100644
--- a/polkadot/parachain/test-chains/basic_add/src/wasm.rs
+++ b/polkadot/parachain/test-chains/basic_add/src/wasm.rs
@@ -16,15 +16,14 @@
 
 //! Defines WASM module logic.
 
-use core::intrinsics;
-
+use core::{intrinsics, panic};
 use parachain::{self, ValidationResult};
 use parachain::codec::Slicable;
 use super::{HeadData, BlockData};
 
 #[panic_implementation]
 #[no_mangle]
-pub fn rust_begin_panic(_info: &::core::panic::PanicInfo) -> ! {
+pub fn panic(_info: &panic::PanicInfo) -> ! {
 	unsafe {
 		intrinsics::abort()
 	}
diff --git a/polkadot/parachain/tests/res/basic_add.wasm b/polkadot/parachain/tests/res/basic_add.wasm
index 709c111d27..c32910f0ad 100755
Binary files a/polkadot/parachain/tests/res/basic_add.wasm and b/polkadot/parachain/tests/res/basic_add.wasm differ
diff --git a/polkadot/primitives/src/lib.rs b/polkadot/primitives/src/lib.rs
index 4deded2969..f7861a8337 100644
--- a/polkadot/primitives/src/lib.rs
+++ b/polkadot/primitives/src/lib.rs
@@ -67,6 +67,10 @@ pub type BlockNumber = u64;
 /// Alias to Ed25519 pubkey that identifies an account on the relay chain.
 pub type AccountId = primitives::hash::H256;
 
+/// The type for looking up accounts. We don't expect more than 4 billion of them, but you
+/// never know...
+pub type AccountIndex = u64;
+
 /// The Ed25519 pub key of an session that belongs to an authority of the relay chain. This is
 /// exactly equivalent to what the substrate calls an "authority".
 pub type SessionKey = primitives::AuthorityId;
diff --git a/polkadot/runtime/src/checked_block.rs b/polkadot/runtime/src/checked_block.rs
new file mode 100644
index 0000000000..4ea7bd0e88
--- /dev/null
+++ b/polkadot/runtime/src/checked_block.rs
@@ -0,0 +1,108 @@
+// Copyright 2017 Parity Technologies (UK) Ltd.
+// This file is part of Polkadot.
+
+// Polkadot is free software: you can redistribute it and/or modify
+// it under the terms of the GNU General Public License as published by
+// the Free Software Foundation, either version 3 of the License, or
+// (at your option) any later version.
+
+// Polkadot is distributed in the hope that it will be useful,
+// but WITHOUT ANY WARRANTY; without even the implied warranty of
+// MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.  See the
+// GNU General Public License for more details.
+
+// You should have received a copy of the GNU General Public License
+// along with Polkadot.  If not, see <http://www.gnu.org/licenses/>.
+
+//! Typesafe block interaction.
+
+use super::{Call, Block, TIMESTAMP_SET_POSITION, PARACHAINS_SET_POSITION};
+use timestamp::Call as TimestampCall;
+use parachains::Call as ParachainsCall;
+use primitives::parachain::CandidateReceipt;
+
+/// Provides a type-safe wrapper around a structurally valid block.
+pub struct CheckedBlock {
+	inner: Block,
+	file_line: Option<(&'static str, u32)>,
+}
+
+impl CheckedBlock {
+	/// Create a new checked block. Fails if the block is not structurally valid.
+	pub fn new(block: Block) -> Result<Self, Block> {
+		let has_timestamp = block.extrinsics.get(TIMESTAMP_SET_POSITION as usize).map_or(false, |xt| {
+			!xt.is_signed() && match xt.extrinsic.function {
+				Call::Timestamp(TimestampCall::set(_)) => true,
+				_ => false,
+			}
+		});
+
+		if !has_timestamp { return Err(block) }
+
+		let has_heads = block.extrinsics.get(PARACHAINS_SET_POSITION as usize).map_or(false, |xt| {
+			!xt.is_signed() && match xt.extrinsic.function {
+				Call::Parachains(ParachainsCall::set_heads(_)) => true,
+				_ => false,
+			}
+		});
+
+		if !has_heads { return Err(block) }
+		Ok(CheckedBlock {
+			inner: block,
+			file_line: None,
+		})
+	}
+
+	// Creates a new checked block, asserting that it is valid.
+	#[doc(hidden)]
+	pub fn new_unchecked(block: Block, file: &'static str, line: u32) -> Self {
+		CheckedBlock {
+			inner: block,
+			file_line: Some((file, line)),
+		}
+	}
+
+	/// Extract the timestamp from the block.
+	pub fn timestamp(&self) -> ::primitives::Timestamp {
+		let x = self.inner.extrinsics.get(TIMESTAMP_SET_POSITION as usize).and_then(|xt| match xt.extrinsic.function {
+			Call::Timestamp(TimestampCall::set(x)) => Some(x),
+			_ => None
+		});
+
+		match x {
+			Some(x) => x,
+			None => panic!("Invalid polkadot block asserted at {:?}", self.file_line),
+		}
+	}
+
+	/// Extract the parachain heads from the block.
+	pub fn parachain_heads(&self) -> &[CandidateReceipt] {
+		let x = self.inner.extrinsics.get(PARACHAINS_SET_POSITION as usize).and_then(|xt| match xt.extrinsic.function {
+			Call::Parachains(ParachainsCall::set_heads(ref x)) => Some(&x[..]),
+			_ => None
+		});
+
+		match x {
+			Some(x) => x,
+			None => panic!("Invalid polkadot block asserted at {:?}", self.file_line),
+		}
+	}
+
+	/// Convert into inner block.
+	pub fn into_inner(self) -> Block { self.inner }
+}
+
+impl ::std::ops::Deref for CheckedBlock {
+	type Target = Block;
+
+	fn deref(&self) -> &Block { &self.inner }
+}
+
+/// Assert that a block is structurally valid. May lead to panic in the future
+/// in case it isn't.
+#[macro_export]
+macro_rules! assert_polkadot_block {
+	($block: expr) => {
+		$crate::CheckedBlock::new_unchecked($block, file!(), line!())
+	}
+}
diff --git a/polkadot/runtime/src/lib.rs b/polkadot/runtime/src/lib.rs
index 16d080cb9e..9d9b3f9a59 100644
--- a/polkadot/runtime/src/lib.rs
+++ b/polkadot/runtime/src/lib.rs
@@ -58,11 +58,17 @@ extern crate substrate_runtime_staking as staking;
 extern crate substrate_runtime_system as system;
 extern crate substrate_runtime_timestamp as timestamp;
 
+#[cfg(feature = "std")]
+mod checked_block;
 mod parachains;
+mod utils;
 
-use rstd::prelude::*;
-use primitives::{AccountId, Balance, BlockNumber, Hash, Index, Log, SessionKey, Signature};
-use primitives::parachain::CandidateReceipt;
+#[cfg(feature = "std")]
+pub use checked_block::CheckedBlock;
+pub use utils::{inherent_extrinsics, check_extrinsic};
+pub use staking::address::Address as RawAddress;
+
+use primitives::{AccountId, AccountIndex, Balance, BlockNumber, Hash, Index, Log, SessionKey, Signature};
 use runtime_primitives::{generic, traits::{HasPublicAux, BlakeTwo256, Convert}};
 
 #[cfg(feature = "std")]
@@ -78,107 +84,23 @@ pub const TIMESTAMP_SET_POSITION: u32 = 0;
 /// The position of the parachains set extrinsic.
 pub const PARACHAINS_SET_POSITION: u32 = 1;
 
+/// The address format for describing accounts.
+pub type Address = staking::Address<Concrete>;
 /// Block Id type for this block.
 pub type BlockId = generic::BlockId<Block>;
 /// Unchecked extrinsic type as expected by this runtime.
-pub type UncheckedExtrinsic = generic::UncheckedExtrinsic<AccountId, Index, Call, Signature>;
-/// Extrinsic type as expected by this runtime.
-pub type Extrinsic = generic::Extrinsic<AccountId, Index, Call>;
-
+pub type UncheckedExtrinsic = generic::UncheckedExtrinsic<Address, Index, Call, Signature>;
+/// Extrinsic type as expected by this runtime. This is not the type that is signed.
+pub type Extrinsic = generic::Extrinsic<Address, Index, Call>;
+/// Extrinsic type that is signed.
+pub type BareExtrinsic = generic::Extrinsic<AccountId, Index, Call>;
 /// Block type as expected by this runtime.
 pub type Block = generic::Block<Header, UncheckedExtrinsic>;
 
-/// Provides a type-safe wrapper around a structurally valid block.
-#[cfg(feature = "std")]
-pub struct CheckedBlock {
-	inner: Block,
-	file_line: Option<(&'static str, u32)>,
-}
-
-#[cfg(feature = "std")]
-impl CheckedBlock {
-	/// Create a new checked block. Fails if the block is not structurally valid.
-	pub fn new(block: Block) -> Result<Self, Block> {
-		let has_timestamp = block.extrinsics.get(TIMESTAMP_SET_POSITION as usize).map_or(false, |xt| {
-			!xt.is_signed() && match xt.extrinsic.function {
-				Call::Timestamp(TimestampCall::set(_)) => true,
-				_ => false,
-			}
-		});
-
-		if !has_timestamp { return Err(block) }
-
-		let has_heads = block.extrinsics.get(PARACHAINS_SET_POSITION as usize).map_or(false, |xt| {
-			!xt.is_signed() && match xt.extrinsic.function {
-				Call::Parachains(ParachainsCall::set_heads(_)) => true,
-				_ => false,
-			}
-		});
-
-		if !has_heads { return Err(block) }
-		Ok(CheckedBlock {
-			inner: block,
-			file_line: None,
-		})
-	}
-
-	// Creates a new checked block, asserting that it is valid.
-	#[doc(hidden)]
-	pub fn new_unchecked(block: Block, file: &'static str, line: u32) -> Self {
-		CheckedBlock {
-			inner: block,
-			file_line: Some((file, line)),
-		}
-	}
-
-	/// Extract the timestamp from the block.
-	pub fn timestamp(&self) -> ::primitives::Timestamp {
-		let x = self.inner.extrinsics.get(TIMESTAMP_SET_POSITION as usize).and_then(|xt| match xt.extrinsic.function {
-			Call::Timestamp(TimestampCall::set(x)) => Some(x),
-			_ => None
-		});
-
-		match x {
-			Some(x) => x,
-			None => panic!("Invalid polkadot block asserted at {:?}", self.file_line),
-		}
-	}
-
-	/// Extract the parachain heads from the block.
-	pub fn parachain_heads(&self) -> &[CandidateReceipt] {
-		let x = self.inner.extrinsics.get(PARACHAINS_SET_POSITION as usize).and_then(|xt| match xt.extrinsic.function {
-			Call::Parachains(ParachainsCall::set_heads(ref x)) => Some(&x[..]),
-			_ => None
-		});
-
-		match x {
-			Some(x) => x,
-			None => panic!("Invalid polkadot block asserted at {:?}", self.file_line),
-		}
-	}
-
-	/// Convert into inner block.
-	pub fn into_inner(self) -> Block { self.inner }
-}
-
-#[cfg(feature = "std")]
-impl ::std::ops::Deref for CheckedBlock {
-	type Target = Block;
-
-	fn deref(&self) -> &Block { &self.inner }
-}
-
-/// Assert that a block is structurally valid. May lead to panic in the future
-/// in case it isn't.
-#[cfg(feature = "std")]
-#[macro_export]
-macro_rules! assert_polkadot_block {
-	($block: expr) => {
-		$crate::CheckedBlock::new_unchecked($block, file!(), line!())
-	}
-}
-
 /// Concrete runtime type used to parameterize the various modules.
+// Workaround for https://github.com/rust-lang/rust/issues/26925 . Remove when sorted.
+#[derive(Clone, Copy, PartialEq, Eq)]
+#[cfg_attr(feature = "std", derive(Debug, Serialize, Deserialize))]
 pub struct Concrete;
 
 impl HasPublicAux for Concrete {
@@ -228,6 +150,7 @@ pub type Session = session::Module<Concrete>;
 impl staking::Trait for Concrete {
 	type Balance = Balance;
 	type DetermineContractAddress = BlakeTwo256;
+	type AccountIndex = AccountIndex;
 }
 /// Staking module for this concrete runtime.
 pub type Staking = staking::Module<Concrete>;
@@ -280,7 +203,7 @@ impl_outer_dispatch! {
 }
 
 /// Executive: handles dispatch to the various modules.
-pub type Executive = executive::Executive<Concrete, Block, Staking,
+pub type Executive = executive::Executive<Concrete, Block, Staking, Staking,
 	(((((((), Parachains), Council), Democracy), Staking), Session), Timestamp)>;
 
 impl_outer_config! {
@@ -295,35 +218,6 @@ impl_outer_config! {
 	}
 }
 
-/// Produces the list of inherent extrinsics.
-pub fn inherent_extrinsics(timestamp: ::primitives::Timestamp, parachain_heads: Vec<CandidateReceipt>) -> Vec<UncheckedExtrinsic> {
-	vec![
-		UncheckedExtrinsic {
-			extrinsic: Extrinsic {
-				signed: Default::default(),
-				function: Call::Timestamp(TimestampCall::set(timestamp)),
-				index: 0,
-			},
-			signature: Default::default(),
-		},
-		UncheckedExtrinsic {
-			extrinsic: Extrinsic {
-				signed: Default::default(),
-				function: Call::Parachains(ParachainsCall::set_heads(parachain_heads)),
-				index: 0,
-			},
-			signature: Default::default(),
-		},
-	]
-}
-
-/// Checks an unchecked extrinsic for validity.
-pub fn check_extrinsic(xt: UncheckedExtrinsic) -> bool {
-	use runtime_primitives::traits::Checkable;
-
-	xt.check().is_ok()
-}
-
 pub mod api {
 	impl_stubs!(
 		authorities => |()| super::Consensus::authorities(),
@@ -378,14 +272,14 @@ mod tests {
 		let mut block = Block {
 			header: Header::new(1, Default::default(), Default::default(), Default::default(), Default::default()),
 			extrinsics: vec![
-				UncheckedExtrinsic {
-					extrinsic: Extrinsic {
+				UncheckedExtrinsic::new(
+					generic::Extrinsic {
 						function: Call::Timestamp(timestamp::Call::set(100_000_000)),
 						signed: Default::default(),
 						index: Default::default(),
 					},
-					signature: Default::default(),
-				}
+					Default::default(),
+				)
 			],
 		};
 
@@ -394,14 +288,14 @@ mod tests {
 
 		assert_eq!(block, decoded);
 
-		block.extrinsics.push(UncheckedExtrinsic {
-			extrinsic: Extrinsic {
+		block.extrinsics.push(UncheckedExtrinsic::new(
+			generic::Extrinsic {
 				function: Call::Staking(staking::Call::stake()),
 				signed: Default::default(),
 				index: 10101,
 			},
-			signature: Default::default(),
-		});
+			Default::default(),
+		));
 
 		let raw = block.encode();
 		let decoded = Block::decode(&mut &raw[..]).unwrap();
@@ -414,25 +308,25 @@ mod tests {
 		let mut block = Block {
 			header: Header::new(1, Default::default(), Default::default(), Default::default(), Default::default()),
 			extrinsics: vec![
-				UncheckedExtrinsic {
-					extrinsic: Extrinsic {
+				UncheckedExtrinsic::new(
+					generic::Extrinsic {
 						function: Call::Timestamp(timestamp::Call::set(100_000_000)),
 						signed: Default::default(),
 						index: Default::default(),
 					},
-					signature: Default::default(),
-				}
+					Default::default(),
+				)
 			],
 		};
 
-		block.extrinsics.push(UncheckedExtrinsic {
-			extrinsic: Extrinsic {
+		block.extrinsics.push(UncheckedExtrinsic::new(
+			generic::Extrinsic {
 				function: Call::Staking(staking::Call::stake()),
 				signed: Default::default(),
 				index: 10101,
 			},
-			signature: Default::default(),
-		});
+			Default::default()
+		));
 
 		let raw = block.encode();
 		let decoded_primitive = ::primitives::Block::decode(&mut &raw[..]).unwrap();
@@ -444,22 +338,24 @@ mod tests {
 
 	#[test]
 	fn serialize_unchecked() {
-		let tx = UncheckedExtrinsic {
-			extrinsic: Extrinsic {
-				signed: [1; 32].into(),
+		let tx = UncheckedExtrinsic::new(
+			Extrinsic {
+				signed: AccountId::from([1; 32]).into(),
 				index: 999,
 				function: Call::Timestamp(TimestampCall::set(135135)),
 			},
-			signature: runtime_primitives::Ed25519Signature(primitives::hash::H512([0; 64])).into(),
-		};
-		// 71000000
-		// 0101010101010101010101010101010101010101010101010101010101010101
-		// e703000000000000
-		// 00
+			runtime_primitives::Ed25519Signature(primitives::hash::H512([0; 64])).into()
+		);
+
+		// 6f000000
+		// ff0101010101010101010101010101010101010101010101010101010101010101
+		// e7030000
+		// 0300
 		// df0f0200
 		// 0000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000
 
 		let v = Slicable::encode(&tx);
+		assert_eq!(&v[..], &hex!["6f000000ff0101010101010101010101010101010101010101010101010101010101010101e70300000300df0f02000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000"][..]);
 		println!("{}", HexDisplay::from(&v));
 		assert_eq!(UncheckedExtrinsic::decode(&mut &v[..]).unwrap(), tx);
 	}
@@ -467,7 +363,7 @@ mod tests {
 	#[test]
 	fn serialize_checked() {
 		let xt = Extrinsic {
-			signed: hex!["0d71d1a9cad6f2ab773435a7dec1bac019994d05d1dd5eb3108211dcf25c9d1e"].into(),
+			signed: AccountId::from(hex!["0d71d1a9cad6f2ab773435a7dec1bac019994d05d1dd5eb3108211dcf25c9d1e"]).into(),
 			index: 0,
 			function: Call::CouncilVoting(council::voting::Call::propose(Box::new(
 				PrivCall::Consensus(consensus::PrivCall::set_code(
@@ -476,11 +372,6 @@ mod tests {
 			))),
 		};
 		let v = Slicable::encode(&xt);
-
-		let data = hex!["e00000000d71d1a9cad6f2ab773435a7dec1bac019994d05d1dd5eb3108211dcf25c9d1e0000000007000000000000006369D39D892B7B87A6769F90E14C618C2B84EBB293E2CC46640136E112C078C75619AC2E0815F2511568736623C055156C8FC427CE2AEE4AE2838F86EFE80208"];
-		let uxt: UncheckedExtrinsic = Slicable::decode(&mut &data[..]).unwrap();
-		assert_eq!(uxt.extrinsic, xt);
-
 		assert_eq!(Extrinsic::decode(&mut &v[..]).unwrap(), xt);
 	}
 }
diff --git a/polkadot/runtime/src/parachains.rs b/polkadot/runtime/src/parachains.rs
index 5bd62afcf2..9bf9a2d181 100644
--- a/polkadot/runtime/src/parachains.rs
+++ b/polkadot/runtime/src/parachains.rs
@@ -234,6 +234,7 @@ mod tests {
 	use runtime_primitives::testing::{Digest, Header};
 	use consensus;
 
+	#[derive(Clone, Eq, PartialEq)]
 	pub struct Test;
 	impl HasPublicAux for Test {
 		type PublicAux = u64;
diff --git a/polkadot/runtime/src/utils.rs b/polkadot/runtime/src/utils.rs
new file mode 100644
index 0000000000..4c16e215ba
--- /dev/null
+++ b/polkadot/runtime/src/utils.rs
@@ -0,0 +1,51 @@
+// Copyright 2017 Parity Technologies (UK) Ltd.
+// This file is part of Polkadot.
+
+// Polkadot is free software: you can redistribute it and/or modify
+// it under the terms of the GNU General Public License as published by
+// the Free Software Foundation, either version 3 of the License, or
+// (at your option) any later version.
+
+// Polkadot is distributed in the hope that it will be useful,
+// but WITHOUT ANY WARRANTY; without even the implied warranty of
+// MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.  See the
+// GNU General Public License for more details.
+
+// You should have received a copy of the GNU General Public License
+// along with Polkadot.  If not, see <http://www.gnu.org/licenses/>.
+
+//! Utils for block interaction.
+
+use rstd::prelude::*;
+use super::{Call, UncheckedExtrinsic, Extrinsic, Staking};
+use runtime_primitives::traits::{Checkable, AuxLookup};
+use primitives::parachain::CandidateReceipt;
+use timestamp::Call as TimestampCall;
+use parachains::Call as ParachainsCall;
+
+/// Produces the list of inherent extrinsics.
+pub fn inherent_extrinsics(timestamp: ::primitives::Timestamp, parachain_heads: Vec<CandidateReceipt>) -> Vec<UncheckedExtrinsic> {
+	vec![
+		UncheckedExtrinsic::new(
+			Extrinsic {
+				signed: Default::default(),
+				function: Call::Timestamp(TimestampCall::set(timestamp)),
+				index: 0,
+			},
+			Default::default()
+		),
+		UncheckedExtrinsic::new(
+			Extrinsic {
+				signed: Default::default(),
+				function: Call::Parachains(ParachainsCall::set_heads(parachain_heads)),
+				index: 0,
+			},
+			Default::default()
+		)
+	]
+}
+
+/// Checks an unchecked extrinsic for validity.
+pub fn check_extrinsic(xt: UncheckedExtrinsic) -> bool {
+	xt.check(Staking::lookup).is_ok()
+}
diff --git a/polkadot/runtime/wasm/Cargo.lock b/polkadot/runtime/wasm/Cargo.lock
index 40e3acb37a..aac3375c7a 100644
--- a/polkadot/runtime/wasm/Cargo.lock
+++ b/polkadot/runtime/wasm/Cargo.lock
@@ -543,6 +543,9 @@ source = "registry+https://github.com/rust-lang/crates.io-index"
 [[package]]
 name = "substrate-codec"
 version = "0.1.0"
+dependencies = [
+ "arrayvec 0.4.7 (registry+https://github.com/rust-lang/crates.io-index)",
+]
 
 [[package]]
 name = "substrate-keyring"
@@ -647,6 +650,7 @@ version = "0.1.0"
 dependencies = [
  "hex-literal 0.1.1 (registry+https://github.com/rust-lang/crates.io-index)",
  "serde 1.0.64 (registry+https://github.com/rust-lang/crates.io-index)",
+ "serde_derive 1.0.64 (registry+https://github.com/rust-lang/crates.io-index)",
  "substrate-codec 0.1.0",
  "substrate-runtime-io 0.1.0",
  "substrate-runtime-primitives 0.1.0",
@@ -767,6 +771,7 @@ dependencies = [
  "hex-literal 0.1.1 (registry+https://github.com/rust-lang/crates.io-index)",
  "safe-mix 0.1.0",
  "serde 1.0.64 (registry+https://github.com/rust-lang/crates.io-index)",
+ "serde_derive 1.0.64 (registry+https://github.com/rust-lang/crates.io-index)",
  "substrate-codec 0.1.0",
  "substrate-primitives 0.1.0",
  "substrate-runtime-io 0.1.0",
diff --git a/polkadot/runtime/wasm/target/wasm32-unknown-unknown/release/polkadot_runtime.compact.wasm b/polkadot/runtime/wasm/target/wasm32-unknown-unknown/release/polkadot_runtime.compact.wasm
index 9ea43b2f9a..4e37cbbab1 100644
Binary files a/polkadot/runtime/wasm/target/wasm32-unknown-unknown/release/polkadot_runtime.compact.wasm and b/polkadot/runtime/wasm/target/wasm32-unknown-unknown/release/polkadot_runtime.compact.wasm differ
diff --git a/polkadot/runtime/wasm/target/wasm32-unknown-unknown/release/polkadot_runtime.wasm b/polkadot/runtime/wasm/target/wasm32-unknown-unknown/release/polkadot_runtime.wasm
index dc22849a14..2d84f17d87 100755
Binary files a/polkadot/runtime/wasm/target/wasm32-unknown-unknown/release/polkadot_runtime.wasm and b/polkadot/runtime/wasm/target/wasm32-unknown-unknown/release/polkadot_runtime.wasm differ
diff --git a/polkadot/service/src/lib.rs b/polkadot/service/src/lib.rs
index 1e86d52112..a22e62d342 100644
--- a/polkadot/service/src/lib.rs
+++ b/polkadot/service/src/lib.rs
@@ -177,6 +177,11 @@ fn poc_2_testnet_config() -> ChainConfig {
 			intentions: initial_authorities.iter().cloned().map(Into::into).collect(),
 			transaction_base_fee: 100,
 			transaction_byte_fee: 1,
+			existential_deposit: 500,
+			transfer_fee: 0,
+			creation_fee: 0,
+			contract_fee: 0,
+			reclaim_rebate: 0,
 			balances: endowed_accounts.iter().map(|&k|(k, 1u128 << 60)).collect(),
 			validator_count: 12,
 			sessions_per_era: 24,	// 24 hours per era.
@@ -236,6 +241,11 @@ fn testnet_config(initial_authorities: Vec<AuthorityId>) -> ChainConfig {
 			intentions: initial_authorities.iter().cloned().map(Into::into).collect(),
 			transaction_base_fee: 1,
 			transaction_byte_fee: 0,
+			existential_deposit: 500,
+			transfer_fee: 0,
+			creation_fee: 0,
+			contract_fee: 0,
+			reclaim_rebate: 0,
 			balances: endowed_accounts.iter().map(|&k|(k, (1u128 << 60))).collect(),
 			validator_count: 2,
 			sessions_per_era: 5,
diff --git a/polkadot/transaction-pool/Cargo.toml b/polkadot/transaction-pool/Cargo.toml
index 140bea88e6..89fa3e88c0 100644
--- a/polkadot/transaction-pool/Cargo.toml
+++ b/polkadot/transaction-pool/Cargo.toml
@@ -6,11 +6,13 @@ authors = ["Parity Technologies <admin@parity.io>"]
 [dependencies]
 log = "0.3.0"
 error-chain = "0.11"
+parking_lot = "0.4"
 polkadot-api = { path = "../api" }
 polkadot-primitives = { path = "../primitives" }
 polkadot-runtime = { path = "../runtime" }
 substrate-client = { path = "../../substrate/client" }
 substrate-codec = { path = "../../substrate/codec" }
+substrate-keyring = { path = "../../substrate/keyring" }
 substrate-extrinsic-pool = { path = "../../substrate/extrinsic-pool" }
 substrate-primitives = { path = "../../substrate/primitives" }
 substrate-runtime-primitives = { path = "../../substrate/runtime/primitives" }
diff --git a/polkadot/transaction-pool/src/error.rs b/polkadot/transaction-pool/src/error.rs
index 18b79e59fe..78f9d3e771 100644
--- a/polkadot/transaction-pool/src/error.rs
+++ b/polkadot/transaction-pool/src/error.rs
@@ -16,7 +16,7 @@
 
 use extrinsic_pool::{self, txpool};
 use primitives::Hash;
-use runtime::UncheckedExtrinsic;
+use runtime::{Address, UncheckedExtrinsic};
 
 error_chain! {
 	links {
@@ -34,9 +34,9 @@ error_chain! {
 			display("Inehrent transactions cannot be queued."),
 		}
 		/// Attempted to queue a transaction with bad signature.
-		BadSignature(xt: UncheckedExtrinsic) {
+		BadSignature(e: &'static str) {
 			description("Transaction had bad signature."),
-			display("Transaction had bad signature."),
+			display("Transaction had bad signature: {}", e),
 		}
 		/// Attempted to queue a transaction that is already in the pool.
 		AlreadyImported(hash: Hash) {
@@ -48,6 +48,16 @@ error_chain! {
 			description("Error importing transaction"),
 			display("Error importing transaction: {}", err.description()),
 		}
+		/// Runtime failure.
+		UnrecognisedAddress(who: Address) {
+			description("Unrecognised address in extrinsic"),
+			display("Unrecognised address in extrinsic: {}", who),
+		}
+		/// Extrinsic is not yet checked.
+		NotReady {
+			description("Indexed address is unverified"),
+			display("Indexed address is unverified"),
+		}
 	}
 }
 
diff --git a/polkadot/transaction-pool/src/lib.rs b/polkadot/transaction-pool/src/lib.rs
index 2c2224b5d3..843af20fb1 100644
--- a/polkadot/transaction-pool/src/lib.rs
+++ b/polkadot/transaction-pool/src/lib.rs
@@ -22,6 +22,10 @@ extern crate substrate_runtime_primitives;
 extern crate polkadot_runtime as runtime;
 extern crate polkadot_primitives as primitives;
 extern crate polkadot_api;
+extern crate parking_lot;
+
+#[cfg(test)]
+extern crate substrate_keyring;
 
 #[macro_use]
 extern crate error_chain;
@@ -33,18 +37,20 @@ mod error;
 
 use std::{
 	cmp::Ordering,
-	collections::HashMap,
+	collections::{hash_map::Entry, HashMap},
 	ops::Deref,
 	sync::Arc,
+	result
 };
+use parking_lot::Mutex;
 
 use codec::Slicable;
 use extrinsic_pool::{Pool, txpool::{self, Readiness, scoring::{Change, Choice}}};
 use extrinsic_pool::api::ExtrinsicPool;
 use polkadot_api::PolkadotApi;
-use primitives::{AccountId, Hash, UncheckedExtrinsic as FutureProofUncheckedExtrinsic};
-use runtime::UncheckedExtrinsic;
-use substrate_runtime_primitives::traits::{Bounded, Checkable, BlakeTwo256, Hashing};
+use primitives::{AccountId, AccountIndex, Hash, Index, UncheckedExtrinsic as FutureProofUncheckedExtrinsic};
+use runtime::{Address, RawAddress, UncheckedExtrinsic};
+use substrate_runtime_primitives::traits::{Bounded, Checkable, Hashing, BlakeTwo256};
 
 pub use extrinsic_pool::txpool::{Options, Status, LightStatus, VerifiedTransaction as VerifiedTransactionOps};
 pub use error::{Error, ErrorKind, Result};
@@ -53,37 +59,68 @@ pub use error::{Error, ErrorKind, Result};
 pub type CheckedExtrinsic = <UncheckedExtrinsic as Checkable>::Checked;
 
 /// A verified transaction which should be includable and non-inherent.
-#[derive(Debug, Clone)]
+#[derive(Debug)]
 pub struct VerifiedTransaction {
-	inner: CheckedExtrinsic,
+	original: UncheckedExtrinsic,
+	// `create()` will leave this as `Some` only if the `Address` is an `AccountId`, otherwise a
+	// call to `polish` is needed.
+	inner: Mutex<Option<CheckedExtrinsic>>,
 	hash: Hash,
 	encoded_size: usize,
 }
 
+impl Clone for VerifiedTransaction {
+	fn clone(&self) -> Self {
+		VerifiedTransaction {
+			original: self.original.clone(),
+			inner: Mutex::new(self.inner.lock().clone()),
+			hash: self.hash.clone(),
+			encoded_size: self.encoded_size.clone(),
+		}
+	}
+}
+
 impl VerifiedTransaction {
 	/// Attempt to verify a transaction.
-	fn create(xt: UncheckedExtrinsic) -> Result<Self> {
-		if !xt.is_signed() {
-			bail!(ErrorKind::IsInherent(xt))
+	fn create(original: UncheckedExtrinsic) -> Result<Self> {
+		if !original.is_signed() {
+			bail!(ErrorKind::IsInherent(original))
 		}
+		const UNAVAILABLE_MESSAGE: &'static str = "chain state not available";
+		let (encoded_size, hash) = original.using_encoded(|e| (e.len(), BlakeTwo256::hash(e)));
+		let lookup = |a| match a {
+			RawAddress::Id(i) => Ok(i),
+			_ => Err(UNAVAILABLE_MESSAGE),
+		};
+		let inner = Mutex::new(match original.clone().check(lookup) {
+			Ok(xt) => Some(xt),
+			Err(e) if e == UNAVAILABLE_MESSAGE => None,
+			Err(e) => bail!(ErrorKind::BadSignature(e)),
+		});
+		Ok(VerifiedTransaction { original, inner, hash, encoded_size })
+	}
 
-		let message = Slicable::encode(&xt);
-		match xt.check() {
-			Ok(xt) => {
-				let hash = BlakeTwo256::hash(&message);
-				Ok(VerifiedTransaction {
-					inner: xt,
-					hash: hash.into(),
-					encoded_size: message.len(),
-				})
-			}
-			Err(xt) => Err(ErrorKind::BadSignature(xt).into()),
-		}
+	/// If this transaction isn't really verified, verify it and morph it into a really verified
+	/// transaction.
+	pub fn polish<F>(&self, lookup: F) -> Result<()> where
+	 	F: FnOnce(Address) -> result::Result<AccountId, &'static str> + Send + Sync
+	{
+		let inner: result::Result<CheckedExtrinsic, Error> = self.original
+			.clone()
+			.check(lookup)
+			.map_err(|e| ErrorKind::BadSignature(e).into());
+		*self.inner.lock() = Some(inner?);
+		Ok(())
+	}
+
+	/// Is this transaction *really* verified?
+	pub fn is_really_verified(&self) -> bool {
+		self.inner.lock().is_some()
 	}
 
 	/// Access the underlying transaction.
 	pub fn as_transaction(&self) -> &UncheckedExtrinsic {
-		self.as_ref().as_unchecked()
+		&self.original
 	}
 
 	/// Convert to primitive unchecked extrinsic.
@@ -93,8 +130,8 @@ impl VerifiedTransaction {
 	}
 
 	/// Consume the verified transaciton, yielding the unchecked counterpart.
-	pub fn into_inner(self) -> CheckedExtrinsic {
-		self.inner
+	pub fn into_inner(self) -> Result<CheckedExtrinsic> {
+		self.inner.lock().clone().ok_or_else(|| ErrorKind::NotReady.into())
 	}
 
 	/// Get the 256-bit hash of this transaction.
@@ -103,8 +140,13 @@ impl VerifiedTransaction {
 	}
 
 	/// Get the account ID of the sender of this transaction.
-	pub fn sender(&self) -> &AccountId {
-		&self.inner.signed
+	pub fn sender(&self) -> Result<AccountId> {
+		self.inner.lock().as_ref().map(|i| i.signed.clone()).ok_or_else(|| ErrorKind::NotReady.into())
+	}
+
+	/// Get the account ID of the sender of this transaction.
+	pub fn index(&self) -> Index {
+		self.original.extrinsic.index
 	}
 
 	/// Get encoded size of the transaction.
@@ -113,22 +155,16 @@ impl VerifiedTransaction {
 	}
 }
 
-impl AsRef<CheckedExtrinsic> for VerifiedTransaction {
-	fn as_ref(&self) -> &CheckedExtrinsic {
-		&self.inner
-	}
-}
-
 impl txpool::VerifiedTransaction for VerifiedTransaction {
 	type Hash = Hash;
-	type Sender = AccountId;
+	type Sender = Address;
 
 	fn hash(&self) -> &Self::Hash {
 		&self.hash
 	}
 
 	fn sender(&self) -> &Self::Sender {
-		&self.inner.signed
+		self.original.sender()
 	}
 
 	fn mem_usage(&self) -> usize {
@@ -145,7 +181,7 @@ impl txpool::Scoring<VerifiedTransaction> for Scoring {
 	type Event = ();
 
 	fn compare(&self, old: &VerifiedTransaction, other: &VerifiedTransaction) -> Ordering {
-		old.inner.index.cmp(&other.inner.index)
+		old.index().cmp(&other.index())
 	}
 
 	fn choose(&self, _old: &VerifiedTransaction, _new: &VerifiedTransaction) -> Choice {
@@ -173,17 +209,8 @@ impl txpool::Scoring<VerifiedTransaction> for Scoring {
 pub struct Ready<'a, T: 'a + PolkadotApi> {
 	at_block: T::CheckedBlockId,
 	api: &'a T,
-	known_indices: HashMap<AccountId, ::primitives::Index>,
-}
-
-impl<'a, T: 'a + PolkadotApi> Clone for Ready<'a, T> {
-	fn clone(&self) -> Self {
-		Ready {
-			at_block: self.at_block.clone(),
-			api: self.api,
-			known_indices: self.known_indices.clone(),
-		}
-	}
+	known_nonces: HashMap<AccountId, (::primitives::Index, bool)>,
+	known_indexes: HashMap<AccountIndex, AccountId>,
 }
 
 impl<'a, T: 'a + PolkadotApi> Ready<'a, T> {
@@ -193,34 +220,85 @@ impl<'a, T: 'a + PolkadotApi> Ready<'a, T> {
 		Ready {
 			at_block: at,
 			api,
-			known_indices: HashMap::new(),
+			known_nonces: HashMap::new(),
+			known_indexes: HashMap::new(),
 		}
 	}
 }
 
-impl<'a, T: 'a + PolkadotApi> txpool::Ready<VerifiedTransaction> for Ready<'a, T> {
+impl<'a, T: 'a + PolkadotApi> Clone for Ready<'a, T> {
+	fn clone(&self) -> Self {
+		Ready {
+			at_block: self.at_block.clone(),
+			api: self.api,
+			known_nonces: self.known_nonces.clone(),
+			known_indexes: self.known_indexes.clone(),
+		}
+	}
+}
+
+impl<'a, T: 'a + PolkadotApi> txpool::Ready<VerifiedTransaction> for Ready<'a, T>
+{
 	fn is_ready(&mut self, xt: &VerifiedTransaction) -> Readiness {
-		let sender = xt.inner.signed;
+		if !xt.is_really_verified() {
+			let id = match xt.original.extrinsic.signed.clone() {
+				RawAddress::Id(id) => id.clone(),	// should never happen, since we're not verified.
+				RawAddress::Index(i) => match self.known_indexes.entry(i) {
+					Entry::Occupied(e) => e.get().clone(),
+					Entry::Vacant(e) => {
+						let (api, at_block) = (&self.api, &self.at_block);
+						if let Some(id) = api.lookup(at_block, RawAddress::Index(i))
+							.ok()
+							.and_then(|o| o)
+						{
+							e.insert(id.clone());
+							id
+						} else {
+							// Invalid index.
+							// return stale in order to get the pool to throw it away.
+							return Readiness::Stale
+						}
+					}
+				},
+			};
+			if VerifiedTransaction::polish(xt, move |_| Ok(id)).is_err() {
+				// Invalid signature.
+				// return stale in order to get the pool to throw it away.
+				return Readiness::Stale
+			}
+		}
+
+		// guaranteed to be properly verified at this point.
+
+		let sender = xt.sender().expect("only way to get here is `is_really_verified` or successful `polish`; either guarantees `is_really_verified`; `sender` is `Ok` if `is_really_verified`; qed");
 		trace!(target: "transaction-pool", "Checking readiness of {} (from {})", xt.hash, Hash::from(sender));
 
+		let is_index_sender = match xt.original.extrinsic.signed { RawAddress::Index(_) => false, _ => true };
+
 		// TODO: find a way to handle index error properly -- will need changes to
 		// transaction-pool trait.
 		let (api, at_block) = (&self.api, &self.at_block);
-		let next_index = self.known_indices.entry(sender)
-			.or_insert_with(|| api.index(at_block, sender).ok().unwrap_or_else(Bounded::max_value));
+		let get_nonce = || api.index(at_block, sender).ok().unwrap_or_else(Bounded::max_value);
+		let (next_nonce, was_index_sender) = self.known_nonces.entry(sender).or_insert_with(|| (get_nonce(), is_index_sender));
 
-		trace!(target: "transaction-pool", "Next index for sender is {}; xt index is {}", next_index, xt.inner.index);
+		trace!(target: "transaction-pool", "Next index for sender is {}; xt index is {}", next_nonce, xt.original.extrinsic.index);
 
-		let result = match xt.inner.index.cmp(&next_index) {
-			Ordering::Greater => Readiness::Future,
-			Ordering::Equal => Readiness::Ready,
-			Ordering::Less => Readiness::Stale,
-		};
-
-		// remember to increment `next_index`
-		*next_index = next_index.saturating_add(1);
-
-		result
+		if *was_index_sender == is_index_sender || get_nonce() == *next_nonce {
+			match xt.original.extrinsic.index.cmp(&next_nonce) {
+				Ordering::Greater => Readiness::Future,
+				Ordering::Less => Readiness::Stale,
+				Ordering::Equal => {
+					// remember to increment `next_nonce`
+					// TODO: this won't work perfectly since accounts can now be killed, returning the nonce
+					// to zero.
+					*next_nonce = next_nonce.saturating_add(1);
+					Readiness::Ready
+				}
+			}
+		} else {
+			// ignore for now.
+			Readiness::Future
+		}
 	}
 }
 
@@ -251,8 +329,9 @@ impl TransactionPool {
 		}
 	}
 
+	// TODO: remove. This is pointless - just use `submit()` directly.
 	pub fn import_unchecked_extrinsic(&self, uxt: UncheckedExtrinsic) -> Result<Arc<VerifiedTransaction>> {
-		Ok(self.inner.import(VerifiedTransaction::create(uxt)?)?)
+		self.inner.submit(vec![uxt]).map(|mut v| v.swap_remove(0))
 	}
 }
 
@@ -279,3 +358,246 @@ impl ExtrinsicPool<FutureProofUncheckedExtrinsic, Hash> for TransactionPool {
 			.collect()
 	}
 }
+
+#[cfg(test)]
+mod tests {
+	use super::{TransactionPool, Ready};
+	use substrate_keyring::Keyring::{self, *};
+	use codec::Slicable;
+	use polkadot_api::{PolkadotApi, BlockBuilder, CheckedBlockId, Result};
+	use primitives::{AccountId, AccountIndex, Block, BlockId, Hash, Index, SessionKey, Timestamp,
+		UncheckedExtrinsic as FutureProofUncheckedExtrinsic};
+	use runtime::{RawAddress, Call, TimestampCall, BareExtrinsic, Extrinsic, UncheckedExtrinsic};
+	use primitives::parachain::{CandidateReceipt, DutyRoster, Id as ParaId};
+	use substrate_runtime_primitives::{MaybeUnsigned, generic};
+
+	struct TestBlockBuilder;
+	impl BlockBuilder for TestBlockBuilder {
+		fn push_extrinsic(&mut self, _extrinsic: FutureProofUncheckedExtrinsic) -> Result<()> { unimplemented!() }
+		fn bake(self) -> Result<Block> { unimplemented!() }
+	}
+
+	#[derive(Clone)]
+	struct TestCheckedBlockId(pub BlockId);
+	impl CheckedBlockId for TestCheckedBlockId {
+		fn block_id(&self) -> &BlockId { &self.0 }
+	}
+
+	fn number_of(at: &TestCheckedBlockId) -> u32 {
+		match at.0 {
+			generic::BlockId::Number(n) => n as u32,
+			_ => 0,
+		}
+	}
+
+	#[derive(Clone)]
+	struct TestPolkadotApi;
+	impl PolkadotApi for TestPolkadotApi {
+		type CheckedBlockId = TestCheckedBlockId;
+		type BlockBuilder = TestBlockBuilder;
+
+		fn check_id(&self, id: BlockId) -> Result<TestCheckedBlockId> { Ok(TestCheckedBlockId(id)) }
+		fn session_keys(&self, _at: &TestCheckedBlockId) -> Result<Vec<SessionKey>> { unimplemented!() }
+		fn validators(&self, _at: &TestCheckedBlockId) -> Result<Vec<AccountId>> { unimplemented!() }
+		fn random_seed(&self, _at: &TestCheckedBlockId) -> Result<Hash> { unimplemented!() }
+		fn duty_roster(&self, _at: &TestCheckedBlockId) -> Result<DutyRoster> { unimplemented!() }
+		fn timestamp(&self, _at: &TestCheckedBlockId) -> Result<u64> { unimplemented!() }
+		fn evaluate_block(&self, _at: &TestCheckedBlockId, _block: Block) -> Result<bool> { unimplemented!() }
+		fn active_parachains(&self, _at: &TestCheckedBlockId) -> Result<Vec<ParaId>> { unimplemented!() }
+		fn parachain_code(&self, _at: &TestCheckedBlockId, _parachain: ParaId) -> Result<Option<Vec<u8>>> { unimplemented!() }
+		fn parachain_head(&self, _at: &TestCheckedBlockId, _parachain: ParaId) -> Result<Option<Vec<u8>>> { unimplemented!() }
+		fn build_block(&self, _at: &TestCheckedBlockId, _timestamp: Timestamp, _new_heads: Vec<CandidateReceipt>) -> Result<Self::BlockBuilder> { unimplemented!() }
+		fn inherent_extrinsics(&self, _at: &TestCheckedBlockId, _timestamp: Timestamp, _new_heads: Vec<CandidateReceipt>) -> Result<Vec<Vec<u8>>> { unimplemented!() }
+
+		fn index(&self, _at: &TestCheckedBlockId, _account: AccountId) -> Result<Index> {
+			Ok((_account[0] as u32) + number_of(_at))
+		}
+		fn lookup(&self, _at: &TestCheckedBlockId, _address: RawAddress<AccountId, AccountIndex>) -> Result<Option<AccountId>> {
+			match _address {
+				RawAddress::Id(i) => Ok(Some(i)),
+				RawAddress::Index(i) => Ok(match (i < 8, i + (number_of(_at) as u64) % 8) {
+					(false, _) => None,
+					(_, 0) => Some(Alice.to_raw_public().into()),
+					(_, 1) => Some(Bob.to_raw_public().into()),
+					(_, 2) => Some(Charlie.to_raw_public().into()),
+					(_, 3) => Some(Dave.to_raw_public().into()),
+					(_, 4) => Some(Eve.to_raw_public().into()),
+					(_, 5) => Some(Ferdie.to_raw_public().into()),
+					(_, 6) => Some(One.to_raw_public().into()),
+					(_, 7) => Some(Two.to_raw_public().into()),
+					_ => None,
+				}),
+			}
+		}
+	}
+
+	fn uxt(who: Keyring, nonce: Index, use_id: bool) -> UncheckedExtrinsic {
+		let sxt = BareExtrinsic {
+			signed: who.to_raw_public().into(),
+			index: nonce,
+			function: Call::Timestamp(TimestampCall::set(0)),
+		};
+		let sig = sxt.using_encoded(|e| who.sign(e));
+		UncheckedExtrinsic::new(Extrinsic {
+			signed: if use_id { RawAddress::Id(sxt.signed) } else { RawAddress::Index(
+				match who {
+					Alice => 0,
+					Bob => 1,
+					Charlie => 2,
+					Dave => 3,
+					Eve => 4,
+					Ferdie => 5,
+					One => 6,
+					Two => 7,
+				}
+			)},
+			index: sxt.index,
+			function: sxt.function,
+		}, MaybeUnsigned(sig.into())).using_encoded(|e| UncheckedExtrinsic::decode(&mut &e[..])).unwrap()
+	}
+
+	#[test]
+	fn id_submission_should_work() {
+		let pool = TransactionPool::new(Default::default());
+		pool.submit(vec![uxt(Alice, 209, true)]).unwrap();
+
+		let ready = Ready::create(TestPolkadotApi.check_id(BlockId::number(0)).unwrap(), &TestPolkadotApi);
+		let pending: Vec<_> = pool.cull_and_get_pending(ready, |p| p.map(|a| (a.sender().ok(), a.index())).collect());
+		assert_eq!(pending, vec![(Some(Alice.to_raw_public().into()), 209)]);
+	}
+
+	#[test]
+	fn index_submission_should_work() {
+		let pool = TransactionPool::new(Default::default());
+		pool.submit(vec![uxt(Alice, 209, false)]).unwrap();
+
+		let ready = Ready::create(TestPolkadotApi.check_id(BlockId::number(0)).unwrap(), &TestPolkadotApi);
+		let pending: Vec<_> = pool.cull_and_get_pending(ready, |p| p.map(|a| (a.sender().ok(), a.index())).collect());
+		assert_eq!(pending, vec![(Some(Alice.to_raw_public().into()), 209)]);
+	}
+
+	#[test]
+	fn multiple_id_submission_should_work() {
+		let pool = TransactionPool::new(Default::default());
+		pool.submit(vec![uxt(Alice, 209, true)]).unwrap();
+		pool.submit(vec![uxt(Alice, 210, true)]).unwrap();
+
+		let ready = Ready::create(TestPolkadotApi.check_id(BlockId::number(0)).unwrap(), &TestPolkadotApi);
+		let pending: Vec<_> = pool.cull_and_get_pending(ready, |p| p.map(|a| (a.sender().ok(), a.index())).collect());
+		assert_eq!(pending, vec![(Some(Alice.to_raw_public().into()), 209), (Some(Alice.to_raw_public().into()), 210)]);
+	}
+
+	#[test]
+	fn multiple_index_submission_should_work() {
+		let pool = TransactionPool::new(Default::default());
+		pool.submit(vec![uxt(Alice, 209, false)]).unwrap();
+		pool.submit(vec![uxt(Alice, 210, false)]).unwrap();
+
+		let ready = Ready::create(TestPolkadotApi.check_id(BlockId::number(0)).unwrap(), &TestPolkadotApi);
+		let pending: Vec<_> = pool.cull_and_get_pending(ready, |p| p.map(|a| (a.sender().ok(), a.index())).collect());
+		assert_eq!(pending, vec![(Some(Alice.to_raw_public().into()), 209), (Some(Alice.to_raw_public().into()), 210)]);
+	}
+
+	#[test]
+	fn id_based_early_nonce_should_be_culled() {
+		let pool = TransactionPool::new(Default::default());
+		pool.submit(vec![uxt(Alice, 208, true)]).unwrap();
+
+		let ready = Ready::create(TestPolkadotApi.check_id(BlockId::number(0)).unwrap(), &TestPolkadotApi);
+		let pending: Vec<_> = pool.cull_and_get_pending(ready, |p| p.map(|a| (a.sender().ok(), a.index())).collect());
+		assert_eq!(pending, vec![]);
+	}
+
+	#[test]
+	fn index_based_early_nonce_should_be_culled() {
+		let pool = TransactionPool::new(Default::default());
+		pool.submit(vec![uxt(Alice, 208, false)]).unwrap();
+
+		let ready = Ready::create(TestPolkadotApi.check_id(BlockId::number(0)).unwrap(), &TestPolkadotApi);
+		let pending: Vec<_> = pool.cull_and_get_pending(ready, |p| p.map(|a| (a.sender().ok(), a.index())).collect());
+		assert_eq!(pending, vec![]);
+	}
+
+	#[test]
+	fn id_based_late_nonce_should_be_queued() {
+		let pool = TransactionPool::new(Default::default());
+		let ready = || Ready::create(TestPolkadotApi.check_id(BlockId::number(0)).unwrap(), &TestPolkadotApi);
+
+		pool.submit(vec![uxt(Alice, 210, true)]).unwrap();
+		let pending: Vec<_> = pool.cull_and_get_pending(ready(), |p| p.map(|a| (a.sender().ok(), a.index())).collect());
+		assert_eq!(pending, vec![]);
+
+		pool.submit(vec![uxt(Alice, 209, true)]).unwrap();
+		let pending: Vec<_> = pool.cull_and_get_pending(ready(), |p| p.map(|a| (a.sender().ok(), a.index())).collect());
+		assert_eq!(pending, vec![(Some(Alice.to_raw_public().into()), 209), (Some(Alice.to_raw_public().into()), 210)]);
+	}
+
+	#[test]
+	fn index_based_late_nonce_should_be_queued() {
+		let pool = TransactionPool::new(Default::default());
+		let ready = || Ready::create(TestPolkadotApi.check_id(BlockId::number(0)).unwrap(), &TestPolkadotApi);
+
+		pool.submit(vec![uxt(Alice, 210, false)]).unwrap();
+		let pending: Vec<_> = pool.cull_and_get_pending(ready(), |p| p.map(|a| (a.sender().ok(), a.index())).collect());
+		assert_eq!(pending, vec![]);
+
+		pool.submit(vec![uxt(Alice, 209, false)]).unwrap();
+		let pending: Vec<_> = pool.cull_and_get_pending(ready(), |p| p.map(|a| (a.sender().ok(), a.index())).collect());
+		assert_eq!(pending, vec![(Some(Alice.to_raw_public().into()), 209), (Some(Alice.to_raw_public().into()), 210)]);
+	}
+
+	#[test]
+	fn index_then_id_submission_should_make_progress() {
+		let pool = TransactionPool::new(Default::default());
+		pool.submit(vec![uxt(Alice, 209, false)]).unwrap();
+		pool.submit(vec![uxt(Alice, 210, true)]).unwrap();
+
+		let ready = Ready::create(TestPolkadotApi.check_id(BlockId::number(0)).unwrap(), &TestPolkadotApi);
+		let pending: Vec<_> = pool.cull_and_get_pending(ready, |p| p.map(|a| (a.sender().ok(), a.index())).collect());
+		assert_eq!(pending, vec![
+			(Some(Alice.to_raw_public().into()), 209)
+		]);
+	}
+
+	#[test]
+	fn id_then_index_submission_should_make_progress() {
+		let pool = TransactionPool::new(Default::default());
+		pool.submit(vec![uxt(Alice, 209, true)]).unwrap();
+		pool.submit(vec![uxt(Alice, 210, false)]).unwrap();
+
+		let ready = Ready::create(TestPolkadotApi.check_id(BlockId::number(0)).unwrap(), &TestPolkadotApi);
+		let pending: Vec<_> = pool.cull_and_get_pending(ready, |p| p.map(|a| (a.sender().ok(), a.index())).collect());
+		assert_eq!(pending, vec![
+			(Some(Alice.to_raw_public().into()), 209)
+		]);
+	}
+
+	#[test]
+	fn index_change_should_result_in_second_tx_culled_or_future() {
+		let pool = TransactionPool::new(Default::default());
+		pool.submit(vec![uxt(Alice, 209, false)]).unwrap();
+		pool.submit(vec![uxt(Alice, 210, false)]).unwrap();
+
+		let ready = Ready::create(TestPolkadotApi.check_id(BlockId::number(0)).unwrap(), &TestPolkadotApi);
+		let pending: Vec<_> = pool.cull_and_get_pending(ready, |p| p.map(|a| (a.sender().ok(), a.index())).collect());
+		assert_eq!(pending, vec![
+			(Some(Alice.to_raw_public().into()), 209),
+			(Some(Alice.to_raw_public().into()), 210)
+		]);
+
+		// first xt is mined, but that has a side-effect of switching index 0 from Alice to Bob.
+		// second xt now invalid signature, so it fails.
+
+		// there is no way of reporting this back to the queue right now (TODO). this should cause
+		// the queue to flush all information regarding the sender index/account.
+
+		// after this, a re-evaluation of the second's readiness should result in it being thrown
+		// out (or maybe placed in future queue).
+/*
+		// TODO: uncomment once the new queue design is in.
+		let ready = Ready::create(TestPolkadotApi.check_id(BlockId::number(1)).unwrap(), &TestPolkadotApi);
+		let pending: Vec<_> = pool.cull_and_get_pending(ready, |p| p.map(|a| (a.sender().ok(), a.index())).collect());
+		assert_eq!(pending, vec![]);
+*/
+	}
+}