# On Chain Computation ⎊ Area ⎊ Resource 3

---

## What is the Process of On Chain Computation?

On-chain computation refers to the execution of calculations and code directly on a blockchain network by decentralized nodes. This process ensures transparency and verifiable results, as every computation is recorded on the public ledger. For decentralized derivatives protocols, on-chain computation is vital for functions like calculating collateral ratios and executing liquidations according to pre-defined smart contract logic.

## What is the Limitation of On Chain Computation?

A primary limitation of on-chain computation is the associated cost, often referred to as gas fees, which can become prohibitively expensive during periods of high network traffic. Furthermore, complex calculations, such as advanced derivatives pricing models, may not be feasible to perform on-chain due to resource constraints and latency issues inherent in distributed ledger technology.

## What is the Efficiency of On Chain Computation?

To improve efficiency, many decentralized finance protocols utilize hybrid designs where a portion of the computation, such as complex risk analysis, is performed off-chain, while only critical verification steps are executed on-chain. This balances the need for security with the requirement for low-latency execution in derivatives markets.


---

## [Recursive Proof Composition](https://term.greeks.live/term/recursive-proof-composition/)

## [Gas Limit](https://term.greeks.live/term/gas-limit/)

## [Trading Fee Recalibration](https://term.greeks.live/term/trading-fee-recalibration/)

## [Integration of Real-Time Greeks](https://term.greeks.live/term/integration-of-real-time-greeks/)

## [Off-Chain Computation Oracles](https://term.greeks.live/term/off-chain-computation-oracles/)

## [Real Time Audit](https://term.greeks.live/term/real-time-audit/)

## [Verifiable Computation Proofs](https://term.greeks.live/term/verifiable-computation-proofs/)

## [Verifiable Computation Cost](https://term.greeks.live/term/verifiable-computation-cost/)

## [Computation Cost Abstraction](https://term.greeks.live/term/computation-cost-abstraction/)

## [Off Chain Matching on Chain Settlement](https://term.greeks.live/term/off-chain-matching-on-chain-settlement/)

## [ZK-Proof Computation Fee](https://term.greeks.live/term/zk-proof-computation-fee/)

---

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---

**Original URL:** https://term.greeks.live/area/on-chain-computation/resource/3/