An off-chain contract is an agreement or transaction that occurs outside the main blockchain ledger. These contracts are typically settled or verified on a layer-2 solution or a separate system, with only periodic or final states recorded on the main chain. The primary purpose is to reduce congestion, lower transaction fees, and improve scalability by moving a significant portion of computational load off the main network. While executed off-chain, these contracts often retain a connection to the main blockchain for security and dispute resolution.
Context
Off-chain contracts are a key component of scaling strategies for many blockchain networks, aiming to address limitations in transaction throughput and cost. Debates frequently involve the security trade-offs and trust assumptions associated with moving operations away from the main chain. The continued development of layer-2 solutions and interoperability protocols relies heavily on efficient and secure off-chain contract execution.
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