These days I am working on proj-evm at Agoric where the goal is to ensure we can send tokens from Agoric to an EVM chain and invoke EVM contracts from Agoric.

One of the things that have been confusing lately is what does people mean when they say “on-chain” or “we can’t do this thing on-chain”. I wanted to understand this for clarity around web3 ecosystem. And here is what I’ve got so far.

On-chain activities are those that occur directly on the blockchain. This includes transactions like sending cryptocurrencies, executing smart contracts, and recording any data that needs to be immutable and publicly verifiable.

Everything that happens on-chain is recorded on the blockchain, making it transparent and irreversible.

On-chain activities typically require transaction fee because they use the computational power of the network.

Off-chain activities, on the other hand, happen outside of the blockchain. These can include computations or data storage that occurs on servers or databases not connected to the blockchain.

Off-chain methods are often used to reduce costs and increase transaction speeds.

Examples include signing agreements digitally off the blockchain or processing transactions through side channels before finalizing them on-chain.

Off-chain activities can still be secure and trustworthy but may rely more on traditional security methods rather than blockchain’s decentralized verification.