Definition ∞ On chain spending refers to the value of digital assets transferred and utilized directly on a blockchain network for various transactions, excluding exchange movements. This metric reflects the actual economic activity and utility of a cryptocurrency beyond speculative trading. It includes payments for goods and services, smart contract interactions, and transfers between non-exchange wallets. High on chain spending indicates robust network usage and demand for the asset’s utility.
Context ∞ Analysts frequently use on chain spending data to assess the fundamental health and adoption of a blockchain network. This metric helps differentiate between speculative price movements and genuine utility-driven demand for a digital asset. A key discussion involves developing more precise methods to categorize and filter various types of on chain transactions to avoid misinterpretations. Future research will likely explore the correlation between on chain spending and long-term asset value.
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