On-chain data denotes all information documented directly on the blockchain ledger, encompassing transactions, interactions with smart contracts, and user balances. It is unchanging and open to the public, ensuring transparency and trust in decentralized applications, and allowing DeFi platforms, NFT projects, and DAOs to function effectively.
On-chain data is transparent and anyone can verify and audit blockchain activities in real-time. For example, in DeFi, users can see the liquidity pools, transactions, and smart contract execution validation. This is a very open environment, a trustless environment, where users can connect with decentralized platforms without the need for intermediaries or opaque systems.
On-chain data is used in NFT projects to store important information like ownership, metadata, and transaction history. This makes sure that each NFT’s provenance is verifiable so that buyers and sellers can verify the authenticity and rarity of each NFT.
Onchain data is used for transparent governance by DAOs (Decentralized Autonomous Organizations), recording voting results, fund allocations, and other decision-making processes. These activities are tracked by the members on the blockchain and therefore they are accountable and manipulations are impossible.
On the flip side, on-chain data is immutable, which means there is no way to retroactively alter that data. This is important in preserving the blockchain network’s integrity and encouraging user confidence. The Graph Protocol and blockchain explorers like Etherscan make it easy for developers and users to query and analyze on-chain data.