New On-chain Governance is Having Large Effects on Blockchain Ecosystem

July 27, 2021
Sarah Gormley

Cryptocurrencies are an extremely popular form of currency that was designed as a decentralized financial ecosystem, meaning no central bank or government is running it. Over time, some cryptocurrencies have become slightly centralized. Bitcoin is the prime example of a cryptocurrency that has become slightly centralized as users with large holdings could manipulate the market as they pleased. To counter this issue, crypto ecosystems are beginning to adopt what is known as on-chain, a new form of crypto governance.

A majority of crypto ecosystems use off-chain transactions where users can complete transactions outside of the blockchain network if they have an agreement that a third party is verifying the transaction. The new form of governance for cryptocurrencies, on-chain, was made to address the problem of cryptocurrencies becoming centralized through their use of off-chain transactions. On-chain transactions occur on a blockchain that is reflected on a public ledger to make sure the crypto ecosystem follows all of the rules.

Through on-chain, miners are all to participate in the decision-making process. All miners must validate the transactions before they are officially registered into the blockchain. This form of ledger offers transparency and security to all users, making them feel more comfortable using the platform.

There are a couple of drawbacks when it comes to on-chain transactions including higher fees and slower processing times. The costs are a bit higher because of miners commanding a fee for confirming a transaction in the shortest amount of time. These fees can rack up especially when the network has a large transaction volume. In addition, the on-chain transactions do take a bit more time than off-chain transactions because the miners must take time to go through the validation process before a transaction is recorded on the blockchain network.

One of the most transparent platforms is the eFIN ecosystem — a decentralized ecosystem that merges centralized and decentralized finance to provide the highest level of transparency. eFIN’s goal is to provide safety for cryptocurrencies to be used for daily payments without the large transaction fees that can come with it. The ecosystem was recently altered, now including the eFIN coin, eFIN DEX, eFIN Swap, and the eFIN Mobile Wallet.

On-chain transactions are ideal for participants with the goal being security, transparency, and validation of transactions, while those looking for low transaction fees and fast transactions may want to look at off-chain transactions.

 

Reference:
Zexprwire. “How on-Chain Is Affecting the Blockchain Ecosystem?” TechBullion, 27 July 2021, techbullion.com/how-on-chain-is-affecting-the-blockchain-ecosystem/.

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