On-Chain Settlement

On-chain settlement is the completion of a transfer of digital assets by recording it as a transaction on the blockchain itself. When a sender's wallet broadcasts a signed transaction and it is included in a block, ownership of the coins or tokens moves directly from one address to another, visible to anyone who checks the ledger. Settlement becomes final once the network's rules say it cannot be reversed: after a number of block confirmations on chains with probabilistic finality, or once a block is finalised on chains with deterministic finality. Businesses use on-chain settlement for stablecoin settlement, cross-border transfers and movements between exchanges and custodians. It offers transparency and removes reliance on an intermediary's records, but every transfer pays a network fee and waits for confirmation, and details are public. It is contrasted with off-chain settlement, and on many networks the two are combined.