DefineDeFiWeb3 Glossary

Smart Contract

A computer program that automatically does what it's told when certain things happen. Like a vending machine - put in money, get a snack, no person needed.

Example

A loan program that automatically gives back your collateral when you repay, or sells it if you don't pay on time.

Related Terms

Core Concepts
Smart Contract Execution FlowShows how a smart contract receives input, executes code, and produces outputSmart Contract: Self-Executing CodeINPUTTransactionFunds (ETH)Data/Args📜 Smart Contractif (condition) { execute(); transfer(funds); emit Event();}🔒 Immutable CodeOUTPUTState ChangeTransferEvents/LogsCode runs exactly as written • No human intervention • Results are permanent

⚙️How It Works

  1. 1

    Deployment

    Developer writes code and deploys it to the blockchain - it becomes permanent

  2. 2

    Input

    Users send transactions with funds and/or data to the contract address

  3. 3

    Execution

    The code runs automatically based on its programmed logic - no human needed

  4. 4

    Output

    State changes, token transfers, and events are recorded on-chain permanently

📊Key Numbers

50M+
Ethereum Contracts
deployed smart contracts
1M+
Daily Interactions
contract calls per day
$100B+
Value Secured
in smart contract TVL

⚠️Risks & Warnings

  • •Bugs in smart contracts can lead to permanent loss of funds
  • •Code is immutable - mistakes can't be easily fixed after deployment
  • •Complexity increases attack surface - always check audit status
  • •Upgradeable contracts can be changed by their owners (centralization risk)
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