On-Chain Competition

Definition ∞ On-chain competition refers to the direct rivalry among participants or protocols operating directly on a blockchain network for resources, transaction inclusion, or market share. This can manifest as bidding for block space, competition among decentralized exchanges for liquidity, or validators vying for block production rights. It drives efficiency and innovation within decentralized environments. Such competition influences network fees.
Context ∞ News often reports on the dynamics of on-chain competition, particularly concerning transaction fees during periods of high network activity. Decentralized finance protocols actively compete for user funds and trading volume through various incentive programs. This competition is a constant force shaping the economic models and user experiences within blockchain ecosystems.