> ## Documentation Index
> Fetch the complete documentation index at: https://docs.stratareserve.co/llms.txt
> Use this file to discover all available pages before exploring further.

# On-chain / Off-chain Boundary

> What lives on-chain, what lives off-chain, and why Strata draws the line where it does.

Strata is a hybrid system. Real-world assets, legal ownership, identity, and
documents are inherently off-chain; settlement, liquidity, and programmable
financial primitives are best on-chain. Strata draws a deliberate boundary
between the two and keeps them in sync through a canonical data model.

## What lives where

<Columns cols={2}>
  <Card title="On-chain" icon="link">
    * srUSD issuance and redemption
    * Liquidity, lending, and structured-product markets
    * Collateral positions and programmable settlement
    * Token instruments representing ownership where permitted
  </Card>

  <Card title="Off-chain" icon="building">
    * Legal entity / SPV formation and governing documents
    * Identity, KYC, and accreditation records
    * Asset diligence, valuations, and servicing data
    * Compliance decisions and audit trail
  </Card>
</Columns>

## Why the boundary is drawn here

<AccordionGroup>
  <Accordion title="Legal enforceability stays off-chain" icon="scale-balanced">
    Ownership of a real-world asset is ultimately a legal claim. Strata anchors
    that claim in real entities and documents, then represents it on-chain — it
    does not pretend a token *is* the asset.
  </Accordion>

  <Accordion title="Settlement and liquidity go on-chain" icon="bolt">
    Programmable settlement, composable collateral, and transparent liquidity are
    exactly what blockchains do well. srUSD and the market engines live here.
  </Accordion>

  <Accordion title="The two are reconciled deterministically" icon="arrows-rotate">
    A canonical data model and state machine keep the off-chain record of truth
    and the on-chain representation consistent, with an auditable lineage between
    them.
  </Accordion>
</AccordionGroup>

<Info>
  The result: investors get on-chain transparency and liquidity without giving up
  the legal enforceability and compliance that real-world assets require.
</Info>

<Card title="Ledger integrity & ownership lineage" icon="diagram-project" href="/protocol/security-and-trust">
  How Strata preserves an auditable chain of ownership across the boundary.
</Card>