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Could anyone clarify the logic behind Cardano master key generation from mnemonic.

There is a specification BIP32-Ed25519 https://github.com/LedgerHQ/orakolo/blob/master/papers/Ed25519_BIP%20Final.pdf

But it seems that Cardano doesn't use that algorithm https://github.com/input-output-hk/cardano-addresses/blob/e3ce58addfeefccc16db888008d57fa9a732464d/core/lib/Cardano/Address/Style/Shelley.hs#L1047-L1060

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The seed phrase is generated in cardano-addresses, briefly explained here. This is then used as entropy for private key generation, the logic for this is in cardano-crypto package

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