Off-chain
Activity that occurs outside the base blockchain, often for speed, privacy, or cost efficiency.
Off-chain refers to interactions that do not immediately settle on the base chain. They can later be anchored on-chain or netted into fewer transactions.
"Lightning payments occur off-chain and are later reconciled on-chain when channels close."
Benefits include lower fees, faster confirmations, and improved privacy at the cost of additional complexity and trust assumptions.
"An exchange moves user balances off-chain within its database, only using the blockchain for deposits and withdrawals."
Related Terms
On-chain
→Activity recorded directly on the blockchain and finalized in blocks.
Layer-2
→Layer-2 solutions build on top of Layer-1 to increase throughput and reduce costs, settling results back to the base chain.
Lightning Network
→A second layer solution on Bitcoin's blockchain enabling fast, low-cost transactions through payment channels.
All terms and definitions may update as the Cryptionary improves.
