Definition ∞ On-chain settlement is the process of finalizing a transaction directly on a blockchain network. This means that the transfer of assets and the confirmation of the trade occur and are recorded immutably on the distributed ledger. Unlike off-chain settlement, which relies on intermediaries, on-chain settlement offers greater transparency and security, though it can sometimes involve higher transaction fees and slower confirmation times depending on the network’s load. It is a core function of many blockchain protocols.
Context ∞ The concept of on-chain settlement is central to the discussion of blockchain’s utility in financial transactions and asset transfer. Its efficiency and security are key factors considered by enterprises and financial institutions exploring blockchain adoption. News reports frequently touch upon the scalability of on-chain settlement, particularly in relation to transaction costs and speeds on various blockchain networks, and how advancements in layer-2 solutions or sharding aim to address these limitations.
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