Crypto glossary

Off-chain

Definition

Off-chain describes activity handled outside the main blockchain, such as exchange trades, payment channels or signed messages, settled on-chain later or never.

Not everything in crypto touches the blockchain. Trades on a centralised exchange are entries in the exchange's database, Lightning payments move inside channels between two parties, and many DEX orders or token permits are just signed messages that live off-chain until someone submits them. Only the final result, if anything, is written on-chain.

Moving activity off-chain is the main way to make crypto faster and cheaper. Payment channels, rollups that execute transactions elsewhere and post compressed data, and off-chain order books with on-chain settlement all follow this logic. Signatures created off-chain, such as gasless approvals or DAO polls, avoid fees entirely.

Off-chain usually means accepting different guarantees. Funds on an exchange depend on the exchange's solvency; a channel requires watching for cheating; an off-chain vote may not be binding. Signing an off-chain message can still be dangerous, since malicious permit signatures are a common way for drainers to take tokens without an on-chain approval.

Example

Two Lightning users exchange hundreds of small payments in a channel during a month; only the channel opening and closing transactions ever appear on the Bitcoin blockchain.

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