TLDR: Don’t be lazy - read the whole thing, that's why you are here
An onchain product is any product or application whose core logic or important components are executed on a blockchain.
Imagine a product/ application where every transaction, vote, or contract lives on a blockchain - transparent, immutable, and verifiable by anyone, anywhere around the world. These products, ranging from decentralized finance (DeFi) platforms to stablecoin projects - utilize blockchain’s inherent attributes to remove the necessity for a "human factor".
Key traits include:
Transparency: Every action is recorded on a public ledger.
Immutability: Once recorded, data becomes nearly impossible to alter.
Trustlessness: Users interact with the system without relying on a central authority.
A centralized onchain product is a blockchain-based application or service that operates on a public or private blockchain but is controlled or managed by a central authority. Such a product combines the immutable traits of blockchain with the management and control of a central authority. Think of a cryptocurrency exchange that operates on a blockchain for transaction settlement but employs a centralized approach for user management and customer support (i.e. Coinbase exchange).
Regulatory Note:
These products are typically subjected to strong regulatory frameworks that differ from country to country. The regulatory landscape reinforces structures while expanding oversight to digital assets, which means centralized digital asset providers must now adhere to strict compliance, reporting, and KYC/AML procedures.
Qualities of a centralized onchain product.
Blockchain Integration: It records some data or transactions on a blockchain, like asset ownership, transaction history, or smart contracts, ensuring transparency or immutability for those elements.
Centralized Control: Despite using blockchain, a central authority (e.g. a company or organization) maintains significant control. This could mean:
Custody of private keys or user funds.
Ability to modify or reverse onchain transactions.
Custody of users' data via KYC
A dispute resolution mechanism for trading activities.
Control over the platform’s rules, access, or smart contract execution.
Hybrid Functionality: It combines onchain elements (e.g., tokenized assets or public transaction records) with offchain systems (e.g., proprietary servers or databases) that handle critical operations, user interfaces, or sensitive data.
Permissioned Access: The product may restrict who can interact with the blockchain components, requiring user authentication or approval.
In contrast, decentralized onchain products leverage blockchain not just for data integrity but also for governance. These platforms aim to spread control across a community, making the system resistant to centralized control or points of failure. Think of decentralized exchanges (DEXs) or autonomous organizations (DAOs) where no single party has complete control (i.e. Uniswap, NounsDAO).
Regulatory Note:
Although decentralized products have traditionally operated in a regulatory gray area, regulatory bodies like the SEC may still exercise authority, especially over products that interact with fiat, or require a centralized point of access.
Qualities of a decentralized onchain product.
Full Blockchain Integration: All core functions such as asset issuance, ownership transfers, governance, and user interaction - are executed and stored directly onchain, with no reliance on centralized intermediaries.
Community or DAO Governance: Decision-making is open and typically governed by token holders or a DAO (Decentralized Autonomous Organization). There is no single point of control.
Self-Custody by Design: Users are in full control of their wallets and private keys. The system never takes custody of user funds or credentials.
Permissionless Access: Anyone with a crypto wallet can interact with the protocol - no KYC, no approval, no gatekeepers. This enables borderless participation.
Transparent and Verifiable Activity: All actions and logic are recorded onchain and can be accessed by anyone. This ensures full transparency and trust.
There has been much buzz around the regulatory landscape in Nigeria, especially the government's unstructured approach to blockchain and cryptocurrency. With President Bola Ahmed Tinubu signing the Investments and Securities Act (ISA) 2024 into law, Nigeria is entering a new era of regulated digital assets. This means the crypto space in Nigeria will now be more organized, clear, and better overseen - especially for exchanges and companies that offer digital assets. More structured regulations are to be expected subsequently.
The signing of ISA 2024 is a watershed moment for Nigeria’s digital asset landscape. Here’s why it matters:
Legal Recognition of Cryptocurrencies: For the first time, crypto-assets have been given a definitive legal status in Nigeria (i.e. You can legally keep, buy or sell cryptocurrencies).
Broadened Definition of Securities: Investment deals that involve digital assets are now officially seen as securities. This means that for onchain products using tokens or offering investment opportunities, the SEC will now ensure they are regulated.
Regulatory Oversight: The SEC’s new authority over crypto exchanges and digital asset providers ensures that both centralized and decentralized platforms will have to tread carefully, balancing innovation with compliance.
You can read more about this on Mariblock.
Understanding what you want to build
It is very important to understand what you want to build, Is your product centralized or decentralized? This will help to know what kind of regulation applies. You can start by creating a PRD.
Consult with a legal experts (If you can afford one)
Run your idea by a local blockchain-savvy legal practitioner, they understand the regulatory landscape better than anyone, and would help avoid regulatory pitfalls. You can also Join associations like Blockchain Nigeria User Group to stay informed.
Incorporate Your Business Properly and be Compliant
You might have to register with Corporate Affairs Commission (CAC) if your product is centralized. If you are building a product around financial instruments, or digital asset exchanges, you might need to engage with the Securities and Exchange Commission (SEC) to get clarity or licenses. A very good example of such a product is cNGN
Implement KYC/AML Measures if necessary
Whether you are building a centralized product or a decentralized product, the key is to stay informed, stay compliant, and just build.
If you have any further question, reach me via here.
So the question is no longer what is an onchain product? - it’s what will you build with it.
Audit Your Smart Contracts
Use reputable blockchain auditing firms, this will protect your product from potential threat.
Keep Detailed Records
Always keep detailed records of all transaction histories, Smart contract logs and version history, governance proposals, etc. It is often useful for audits.
Educate your users
Clearly explain how your product works, this builds trust and loyalty.
TLDR: Don’t be lazy - read the whole thing, that's why you are here
An onchain product is any product or application whose core logic or important components are executed on a blockchain.
Imagine a product/ application where every transaction, vote, or contract lives on a blockchain - transparent, immutable, and verifiable by anyone, anywhere around the world. These products, ranging from decentralized finance (DeFi) platforms to stablecoin projects - utilize blockchain’s inherent attributes to remove the necessity for a "human factor".
Key traits include:
Transparency: Every action is recorded on a public ledger.
Immutability: Once recorded, data becomes nearly impossible to alter.
Trustlessness: Users interact with the system without relying on a central authority.
A centralized onchain product is a blockchain-based application or service that operates on a public or private blockchain but is controlled or managed by a central authority. Such a product combines the immutable traits of blockchain with the management and control of a central authority. Think of a cryptocurrency exchange that operates on a blockchain for transaction settlement but employs a centralized approach for user management and customer support (i.e. Coinbase exchange).
Regulatory Note:
These products are typically subjected to strong regulatory frameworks that differ from country to country. The regulatory landscape reinforces structures while expanding oversight to digital assets, which means centralized digital asset providers must now adhere to strict compliance, reporting, and KYC/AML procedures.
Qualities of a centralized onchain product.
Blockchain Integration: It records some data or transactions on a blockchain, like asset ownership, transaction history, or smart contracts, ensuring transparency or immutability for those elements.
Centralized Control: Despite using blockchain, a central authority (e.g. a company or organization) maintains significant control. This could mean:
Custody of private keys or user funds.
Ability to modify or reverse onchain transactions.
Custody of users' data via KYC
A dispute resolution mechanism for trading activities.
Control over the platform’s rules, access, or smart contract execution.
Hybrid Functionality: It combines onchain elements (e.g., tokenized assets or public transaction records) with offchain systems (e.g., proprietary servers or databases) that handle critical operations, user interfaces, or sensitive data.
Permissioned Access: The product may restrict who can interact with the blockchain components, requiring user authentication or approval.
In contrast, decentralized onchain products leverage blockchain not just for data integrity but also for governance. These platforms aim to spread control across a community, making the system resistant to centralized control or points of failure. Think of decentralized exchanges (DEXs) or autonomous organizations (DAOs) where no single party has complete control (i.e. Uniswap, NounsDAO).
Regulatory Note:
Although decentralized products have traditionally operated in a regulatory gray area, regulatory bodies like the SEC may still exercise authority, especially over products that interact with fiat, or require a centralized point of access.
Qualities of a decentralized onchain product.
Full Blockchain Integration: All core functions such as asset issuance, ownership transfers, governance, and user interaction - are executed and stored directly onchain, with no reliance on centralized intermediaries.
Community or DAO Governance: Decision-making is open and typically governed by token holders or a DAO (Decentralized Autonomous Organization). There is no single point of control.
Self-Custody by Design: Users are in full control of their wallets and private keys. The system never takes custody of user funds or credentials.
Permissionless Access: Anyone with a crypto wallet can interact with the protocol - no KYC, no approval, no gatekeepers. This enables borderless participation.
Transparent and Verifiable Activity: All actions and logic are recorded onchain and can be accessed by anyone. This ensures full transparency and trust.
There has been much buzz around the regulatory landscape in Nigeria, especially the government's unstructured approach to blockchain and cryptocurrency. With President Bola Ahmed Tinubu signing the Investments and Securities Act (ISA) 2024 into law, Nigeria is entering a new era of regulated digital assets. This means the crypto space in Nigeria will now be more organized, clear, and better overseen - especially for exchanges and companies that offer digital assets. More structured regulations are to be expected subsequently.
The signing of ISA 2024 is a watershed moment for Nigeria’s digital asset landscape. Here’s why it matters:
Legal Recognition of Cryptocurrencies: For the first time, crypto-assets have been given a definitive legal status in Nigeria (i.e. You can legally keep, buy or sell cryptocurrencies).
Broadened Definition of Securities: Investment deals that involve digital assets are now officially seen as securities. This means that for onchain products using tokens or offering investment opportunities, the SEC will now ensure they are regulated.
Regulatory Oversight: The SEC’s new authority over crypto exchanges and digital asset providers ensures that both centralized and decentralized platforms will have to tread carefully, balancing innovation with compliance.
You can read more about this on Mariblock.
Understanding what you want to build
It is very important to understand what you want to build, Is your product centralized or decentralized? This will help to know what kind of regulation applies. You can start by creating a PRD.
Consult with a legal experts (If you can afford one)
Run your idea by a local blockchain-savvy legal practitioner, they understand the regulatory landscape better than anyone, and would help avoid regulatory pitfalls. You can also Join associations like Blockchain Nigeria User Group to stay informed.
Incorporate Your Business Properly and be Compliant
You might have to register with Corporate Affairs Commission (CAC) if your product is centralized. If you are building a product around financial instruments, or digital asset exchanges, you might need to engage with the Securities and Exchange Commission (SEC) to get clarity or licenses. A very good example of such a product is cNGN
Implement KYC/AML Measures if necessary
Only implement Know-Your-Customer (KYC) and Anti-Money Laundering (AML) procedures if it is essential to what you are building, i.e. If you handle user funds or enable financial transactions in local currencies. This is essential to protect your product and your customers.
Audit Your Smart Contracts
Use reputable blockchain auditing firms, this will protect your product from potential threat.
Keep Detailed Records
Always keep detailed records of all transaction histories, Smart contract logs and version history, governance proposals, etc. It is often useful for audits.
Educate your users
Clearly explain how your product works, this builds trust and loyalty.
Whether you are building a centralized product or a decentralized product, the key is to stay informed, stay compliant, and just build.
If you have any further question, reach me via here.
So the question is no longer what is an onchain product? - it’s what will you build with it.
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