On-chain computation leverages the decentralized nature of blockchain technology to perform computations that are recorded on the blockchain itself. This allows for trustless interactions, where participants can verify the execution of computations independently. Typically, on-chain computations use smart contracts, which are self-executing contracts with the terms of the agreement directly written into code. These computations are visible to all network participants, enhancing compliance and security, but they can also be limited by the blockchain's inherent scalability and cost constraints.