Off-chain

How it is used

Used for data, payments, storage and computation. Trades inside a centralized exchange are usually off-chain: only deposits and withdrawals touch the blockchain. Teams move work off-chain to save fees and time, but users must then trust the off-chain system or a proof that links it back to the chain.

Example sentences

1. The NFT's image is stored off-chain, so the token itself only contains a link to it.

2. Trades between our users are recorded off-chain, and we only use the blockchain for deposits and withdrawals.

Common collocations

• off-chain data
• off-chain storage
• off-chain payment
• off-chain computation

Related terms

• on-chainRecorded directly on the blockchain itself, so that anyone can check it with a block explorer. It describes transactions, data, activity and even voting.
• layer 2A network built on top of a layer 1 blockchain that handles transactions faster and more cheaply, then sends the results back to the main chain for security. Rollups and the Lightning Network are examples.
• oracleA service that brings outside information, such as asset prices, sports results or weather data, onto a blockchain so that smart contracts can use it.
• centralized exchangeA crypto exchange run by a company that holds customers' funds, matches buy and sell orders on its own system and usually checks users' identities. Often shortened to CEX.
• rollupA type of layer 2 that bundles many transactions together off the main chain and posts the compressed data or a proof back to layer 1, which cuts fees while keeping layer 1 security.

More terms: Blockchain Basics

• blockchain
• block
• node
• ledger
• decentralized
• hash
• immutable
• peer-to-peer
• whitepaper