On-Chain vs Off-Chain

One of the key elements of building decentralized applications on Ethereum is to ensure there is transparency in transactions. This is one of the primary reasons DOOR embraces decentralized architecture. Not only does it enable the ability to reward consumers directly using tokens, but it provides a fair and open marketplace to price the value of data.

What is On-Chain?

In the current architecture of DOOR the following transactions will be done on-chain:

  • Any purchase of DOOR tokens via Uniswap (or other exchange)

  • Any withdrawal of DOOR tokens from the DOOR Wallet

  • All Transfers from Internal Accounts including Rewards Account, Holding Account, Team Account, Liquidity Pool Account, and Operations Account.

What is Off-Chain?

In the current architecture of DOOR, the following transactions will be done off-chain. Unfortunately due to the high cost of Ethereum gas fees and the requirement we have to distribute thousands (potentially millions) of micro-transactions, there was a need to manage these transactions off-chain.

  • All Rewards paid to Users for Registrations. Each transaction from the REWARDS pool to the HOLDING pool will be tracked off-chain, and then uploaded as a batch weekly on-chain.

  • All Payments made from Advertisers to Users. Each transaction will be tracked in the HOLDING account (moving from one user's Door wallet to another user's Door wallet).

Of course, any user with DOOR tokens in their (off-chain) Door Wallet can withdraw into their Metamask Wallet (which would then record on-chain). All DOOR Tokens that are held in users' Door Wallets are held in the Holding Account on-chain.

Why are some transactions Off-Chain?

When an Advertiser licenses data from a consumer, the DOOR Tokens are sent from one Door Wallet to another Door Wallet. These micro-transactions are stored off-chain.

The average transaction between an advertiser and a consumer can range from $.01 to $50 USD. Considering Ethereum gas fees could exceed the value of the actual DOOR tokens it is not an option to put every transaction between consumers and advertisers on the Ethereum blockchain. It's also not necessary, considering all tokens are represented on-chain in specific accounts and can be tracked in bulk transfers on-chain.

Other Benefits to Off-Chain Transactions

The other benefit to maintaining the data licensing transactions off-chain is the ability to provide better quality control and offer the ability for advertisers to dispute payment for data. Since DOOR is a data exchange and we manage the purchasing of a product it is important for us to maintain quality control and be able to provide a refund if a dispute is valid.

Essentially, Door Wallet operates like an exchange. DOOR Tokens are held in the account of the User until they want to withdraw and hold DOOR Tokens in their own wallet. This provides Door the flexibility required to operate with minimal cost to the User and also to scale and allow for a quality marketplace for data.

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