What is Off-Chain?

Cardano implements off-chain state channels for scalability through peer-to-peer communication, cryptographic commitments, and dispute resolution mechanisms that enable parties to conduct off-chain transactions, execute smart contract logic, and settle disputes off-chain, reducing on-chain congestion and latency while preserving security and trustlessness.

Ouroboros is Cardano's innovative Proof of Stake (PoS) consensus algorithm designed to achieve decentralization, scalability, and security. It divides time into epochs, each consisting of slots where blocks are produced. Slot leaders are chosen randomly from a pool of stake-holding validators to create and validate blocks. Ouroboros ensures consensus through a process of securely aggregating transactions and reaching agreement on the valid chain.

On-chain refers to transactions or processes that occur directly on the blockchain network.

On-chain scaling involves making changes to the base layer of a blockchain to increase its capacity and performance.