GRVT Hybrid Model: Off-chain & On-chain Transactions

Learn how GRVT bridges decentralized blockchain & fast, cost-efficient off-chain solutions for the ultimate user experience.

GRVT Hybrid Model: Off-chain & On-chain Transactions

So you want to build a cryptocurrency platform that balances transparency, security, and speed. You would quickly run into a key design question: should transactions happen on-chain or off-chain? Each approach has its strengths, but also tradeoffs that complicate scalability and user experience.

That’s the challenge GRVT addresses with its hybrid architecture, which integrates on-chain and off-chain components to deliver a seamless, efficient trading experience.


On-chain vs Off-chain

In the world of cryptocurrencies, on-chain transactions are the default for decentralization. Every transaction is recorded directly on the blockchain, ensuring transparency and tamper-proof records. Meanwhile, off-chain transactions, often executed through Layer 2 solutions, offer speed and cost efficiency by avoiding blockchain bottlenecks but introduce questions about trust and accountability.

Our goal is to understand the tradeoffs between these models and explore how combining them might offer the best of both worlds. That's how GRVT's hybrid design came about.


Why is this an issue?

On-chain and off-chain systems each bring unique challenges to solving scalability and usability for crypto platforms. The blockchain is a global, distributed ledger. To record anything on it, you need to reach consensus with thousands of nodes. This ensures a high degree of security but slows everything down. On the other hand, skipping the blockchain with off-chain transactions sacrifices transparency and trust for speed.

On-chain transactions: On-chain systems rely on miners or validators to process transactions. Once confirmed, a transaction becomes immutable. While this setup ensures transparency and decentralization, it can be expensive and slow. For instance, a sudden spike in demand can lead to skyrocketing fees or congestion — not ideal if you’re aiming for seamless, everyday usability.

Off-chain transactions: Off-chain systems bypass these limitations by moving transactions to private servers or separate networks. Payment channels like the Lightning Network are examples, where transactions happen off-chain but settle on-chain periodically. This offers speed and lower costs but creates challenges in maintaining trust. Users have to believe that the off-chain operator will settle fairly and securely.


GRVT’s hybrid solution: combining strengths

What if we didn’t have to choose between these extremes? GRVT bridges these extremes with a carefully designed model, optimizing for speed, scalability, and security. Our hybrid approach leverages both models, assigning tasks based on their strengths:

  1. On-chain for critical operations: Key functions, like final settlement and dispute resolution, happen on-chain. This ensures the integrity and reliability of the system.
  2. Off-chain for routine interactions: Everyday transactions, like trading between users, occur off-chain to maintain speed and low costs
How your funds move off-chain and on-chain through GRVT

Off-Chain Components: Speed and Flexibility

Most user actions in GRVT initially happen off-chain, processed by GRVT servers. This approach minimizes delays and costs for everyday interactions. However, actions involving user funds are eventually pushed on-chain to ensure trust and transparency. Non-fund-related actions, like KYC, remain entirely off-chain.

Key user actions processed off-chain and forwarded to the GRVT chain include:

  1. Matching Engine: Orders matched by the engine are sent on-chain for settlement.
  2. Risk Engine: Liquidations are flagged off-chain and then verified on-chain.
  3. Account Management: The creation of trading accounts and addition of wallets linked to funds are handled off-chain and later validated on-chain.
  4. Fund Management: Transfers, both internal and external, are processed off-chain and settled on-chain.

This off-chain-first approach ensures that GRVT remains lightning-fast, capable of handling the demands of professional traders and casual users alike.

On-Chain Components: Transparency and Security

Off-chain actions with financial implications are pushed to the GRVT chain and verified on Ethereum using zero-knowledge proofs (ZKPs). This ensures transparency and security without burdening the blockchain with excessive data.

Key on-chain processes include:

  1. Trade Settlement: Matched orders are finalized on-chain, ensuring tamper-proof records.
  2. Risk Engine Validation: Liquidations are verified on-chain to maintain fairness and compliance.
  3. Account Management Validation: Account actions, such as wallet linkage, are validated on-chain for trust.
  4. Fund Management: Transfers are validated and settled on-chain, ensuring the integrity of users’ funds.

GRVT: A New Standard in Hybrid Design

By offloading routine operations to off-chain servers while leveraging the blockchain for critical actions, GRVT achieves the perfect balance of speed, scalability, and decentralization.

This architecture allows GRVT to meet the demands of a global user base, scaling seamlessly while maintaining trust and transparency. For users, this means faster trades, lower costs, and peace of mind — all backed by the security of blockchain technology.

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