Definition ∞ On-chain functionality refers to features and operations that are executed and recorded directly on a blockchain’s public ledger. These activities, including transaction processing, smart contract execution, and state changes, benefit from the blockchain’s inherent security, transparency, and immutability. It represents the core, verifiable actions performed by the network.
Context ∞ The extent of on-chain functionality is a key differentiator among various blockchain protocols, influencing their use cases and performance characteristics. While maximizing on-chain operations ensures full decentralization and transparency, it often comes with scalability limitations and higher transaction costs. Innovations in layer-2 solutions aim to extend and enhance on-chain functionality by offloading some computations while retaining the security benefits.
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