## 2 Blockchain-Based Data Storage Methods: On-Chain, Off-Chain, and Hybrid Approaches
### Practical Integration of On-Chain, Off-Chain, and Hybrid Blockchain Storage Approaches  
Blockchain technology is rapidly being adopted across various industries due to its data security, transparency, and immutability [1; 2; 55; 98; 99]. However, challenges such as managing large datasets, scalability limitations, and high transaction costs have made it impractical to rely on a single data storage approach [17; 18; 47]. As a result, the integration of on-chain, off-chain, and hybrid data storage solutions has become a critical necessity for enhancing the efficiency and flexibility of blockchain systems [15; 16; 37; 46]. From a practical perspective, on-chain storage is typically used for small-sized and high-security data, whereas off-chain solutions enable the cost-effective storage of large datasets [47; 48; 100]. Hybrid models, on the other hand, combine the strengths of both approaches, offering a balanced trade-off between security and performance [16; 37; 46]. For instance, in the healthcare sector, storing sensitive patient records on an off-chain platform such as IPFS, while keeping their integrity references on the blockchain, exemplifies the real-world benefits of such integrations [10; 77; 101]. In Table 5, a comparative analysis of on-chain, off-chain, and hybrid data storage methods is presented through literature-based examples and practical scenarios across different industries. The advantages and challenges of integration processes are examined in detail, along with their impact on sector-specific solutions, providing insights into the future de \begin{table}
\begin{tabular}{p{113.8 pt} p{113.8 pt} p{113.8 pt} p{113.8 pt}} \hline \hline
**Layer-2 Solution** & **Security Model** & **Advantages** & **Challenges/Limitations** \\ \hline ZK-Rollups & Cryptographic proofs (zero-knowledge) [95] & High security, fast verification [95] & High computational cost, proof generation delays [95] \\ \hline Optimistic Rollups & Fraud proof mechanism [96] & Lower costs, Layer-1 security [96] & Fraud proof verification delay (up to a week) [96] \\ \hline Plasma & Child chains linked to Layer-1 [97] & Faster transaction processing [97] & Exit fraud risks, complex withdrawals [97] \\ \hline State Channels & Off-chain transaction channels (e.g., Lightning Network) [97] & Instant transactions, high scalability [97] & Reduced decentralization, requires online counterparties [97] \\ \hline \hline \end{tabular}
\end{table} 
Table 4: A comparative analysis of Layer-2 scaling solutions, examining their security models, advantages, and associated challenges or limitations in optimizing blockchain performance. velopment potential of blockchain-based data storage systems. Each data storage approach offers unique advantages and drawbacks, making context-specific selection crucial. On-chain storage method involves storing all data directly on the blockchain, ensuring immutability, transparency, and reliability. However, it also introduces high transaction costs and scalability limitations. As a result, on-chain storage is primarily preferred for small and critical data that require high security and integrity [1; 2; 55]. Off-chain data storage methods provide cost efficiency and performance benefits when managing large datasets. Storing data in distributed off-chain storage systems significantly reduces the burden on the blockchain, lowering transaction costs. Systems such as IPFS are commonly used for storing large-scale data [10; 77]. For instance, Electronic Health Records (EHRs) can be managed off-chain to enhance security and cost efficiency. Hybrid models combine on-chain and off-chain methods, offering a balanced solution for security and performance [16; 37; 46]. While small and sensitive data are kept on-chain, large datasets are stored in external storage systems. This approach improves system performance while maintaining secure data storage. IPFS-integrated hybrid mod