What Is On-chain?

In decentralised finance, on-chain refers to transactions or activities that are recorded and processed directly on a blockchain network. It is the opposite of off-chain.

In a blockchain, transactions are verified by nodes in the network and added to the chain of blocks that make up the blockchain. These transactions are permanent and unalterable, and the state of the blockchain can be seen by anyone on the network.

When an activity is referred to as “on-chain,” it means that it is recorded directly on the blockchain, as opposed to off-chain, which refers to transactions or activities that are not recorded on the blockchain but are still facilitated by the network.

On-chain transactions are typically considered to be more secure and transparent than off-chain transactions, as they are recorded in a public ledger that is immutable and auditable. Additionally, on-chain transactions are often processed more quickly and with lower fees than off-chain transactions, as they do not require intermediaries or intermediating networks.

Examples of on-chain activities include cryptocurrency transfers, smart contract execution, and decentralised applications (dApps). These activities are all processed directly on the blockchain network, providing a secure and transparent means of conducting transactions and executing code.

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