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Off-Chain Scaling

Definition

Off-chain scaling involves processing transactions or computations outside the main blockchain to improve network capacity and speed. These solutions reduce the load on the base layer by moving a significant portion of activity to auxiliary networks, which then periodically settle a summary of these operations back onto the main chain. Examples include payment channels, sidechains, and optimistic or zero-knowledge rollups. Off-chain scaling is crucial for enabling blockchains to handle a larger volume of users and transactions at lower costs, addressing the inherent limitations of on-chain processing.