Off-Chain Logic

Definition ∞ Off-chain logic refers to computational processes, data storage, or decision-making that occurs external to a blockchain network, yet interacts with it. This logic can process complex computations or manage large datasets more efficiently than on-chain operations. It subsequently submits only necessary results or proofs to the blockchain for final settlement, aiming to enhance scalability and reduce transaction costs.
Context ∞ The utilization of off-chain logic is a frequent discussion point in news concerning blockchain scalability solutions, such as Layer 2 networks and optimistic rollups. It addresses the inherent limitations of on-chain processing. Understanding this distinction is vital for comprehending how digital asset systems can achieve higher transaction throughput and lower fees, while maintaining the security assurances of the underlying blockchain.