Please can you explain the On-chain, side-chain and off-chain. I don't really understand them and how they work
On-chain are traditional transactions, fully recorded into the main blockchain, they are limited by the amount of data each block can hold and the time between blocks.
From there you have two splits:
Side chains are blockchains that are tied to the bitcoin blockchain but have their own protocol rules, so they can offer more transacting capacity on their own but still require a deposit lock from the main chain. Two of them that really matter,
Liquid and
RSKLN (Lighting Network) is off-chain, all the transactions inside it are happening off the main chain but it also doesn't have its own blockchain like the others.
Some people may see it as a problem, but some people do not see it as a problem. The mempool is not congested most of the time.
Most of the time because you have less than 300k transactions a day even when they can get confirmed as cheaply as possible.
This basically means there is little usage considering we are 8 billion on this planet, so what do you think will happen if 1 million users a day will choose to actively transact Bitcoin, would there still be low fees and not a problem?