Definition ∞ On-chain business models are economic frameworks where the primary operations, value exchange, and often governance occur directly on a blockchain. These models leverage smart contracts to automate agreements and execute transactions transparently and immutably. They typically involve decentralized applications, tokenized assets, and direct interaction with the underlying ledger.
Context ∞ Digital asset news frequently highlights the development and growth of on-chain business models in sectors like decentralized finance, gaming, and digital collectibles. Regulatory bodies face challenges in applying traditional financial regulations to these natively digital and often permissionless structures. The scalability and cost-efficiency of underlying blockchains are critical factors determining the viability and expansion of these models.
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