Define ‘On-Chain’ versus ‘Off-Chain’ Execution.
'On-chain' execution refers to a transaction or computation that is processed, verified, and recorded directly on the blockchain ledger by the network's consensus mechanism. 'Off-chain' execution refers to processes that occur outside the main blockchain, such as a price feed from an Oracle or computation in a layer-2 scaling solution.
Smart contracts are typically executed on-chain for finality, but often rely on off-chain data.
Glossar
On-Chain
Ledger ⎊ The term "on-chain" fundamentally denotes data and activity recorded directly onto a blockchain, a distributed, immutable ledger.
Smart Contracts
Function ⎊ Smart contracts are self-executing agreements with the terms of the agreement directly written into lines of code, residing on a decentralized ledger.
Trading Systems
Execution Venue ⎊ Trading Systems refer to the technological infrastructure, encompassing order matching engines, risk management modules, and connectivity layers, that facilitate the execution of buy and sell orders for financial instruments, including crypto derivatives.
Blockchain Ledger
Ledger ⎊ The blockchain ledger, within the context of cryptocurrency, options trading, and financial derivatives, represents a cryptographically secured, distributed database recording transactions across a network.