On-Chain Execution

Definition ∞ On-chain execution refers to the direct processing and settlement of transactions or smart contract operations on a blockchain ledger. Every step of an on-chain operation is recorded and verified by network participants, ensuring transparency and immutability. This method contrasts with off-chain processes, which occur outside the main blockchain and are only settled on-chain later. It forms the foundational mechanism for decentralized applications and digital asset transfers.
Context ∞ The efficiency and cost of on-chain execution remain a central topic in blockchain development, particularly for high-throughput applications like DeFi. News often highlights network congestion and high transaction fees as direct consequences of extensive on-chain activity. The ongoing pursuit of scaling solutions aims to improve the practicality of on-chain execution, allowing for wider adoption and more complex decentralized systems.