In order for anything to happen there must be a transaction, in order to cause a change in the blockchain a transaction must run and consume various UTxO’s and output UTxO’s.

A UTxO is a passive thing, it just sits there until a transaction uses it.

On-chain vs Off-chain

On-chain is about validation

Off-chain part lives in the users wallet, it constructs and submits suitable transactions

On-Chain

Validator

A script that takes pieces of information as inputs:

• Datum
• Redeemer
• Context