"On-chain" refers to transactions and other activities that occur directly on a blockchain's main network. These transactions are publicly recorded on the blockchain's distributed ledger, providing transparency and traceability.
In the context of cryptocurrencies, an on-chain transaction involves the transfer of cryptocurrencies from one wallet to another. It is validated by the network's participants (miners in Proof of Work systems or validators in Proof of Stake systems). Once confirmed, these transactions are immutable, meaning they cannot be altered or deleted.
On-chain also refers to smart contracts, which are self-executing contracts with the terms of the agreement directly written into code. These contracts run on the blockchain, making them transparent and resistant to censorship.
On-chain governance is another aspect where decisions about the future of the blockchain project are made by those who hold the blockchain's native token.
While on-chain activities provide high security and transparency, they can be slower and more expensive than off-chain activities due to the computational power required to validate transactions and the limited scalability of many blockchains.