Off-chain refers to transactions or processes that occur outside of the main blockchain ledger. These operations are often utilized to improve transaction speed and reduce costs by bundling multiple transactions together before submitting a final, aggregated record to the main chain. Examples include the use of payment channels or sidechains. This approach aims to address scalability limitations inherent in some blockchain architectures.
Context
Current discussions surrounding off-chain solutions are heavily focused on the development and adoption of layer-2 scaling technologies, such as optimistic rollups and zero-knowledge rollups, as well as state channels. Key debates involve the security guarantees provided by different off-chain methods, their interoperability with mainnet protocols, and their suitability for various types of transactions. Future developments to monitor include the increased throughput and reduced transaction fees offered by these solutions, and their potential to support a wider range of decentralized applications and economic activity.
A compromised third-party API allowed unauthorized withdrawal authority, exposing on-chain controls and draining $41 million in SOL from a DeFi staking program.
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