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
Blockchain Smart Contract Execution DiagramBlockchain smart contract diagram showing how a DeFi 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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