Glossary > Smart contract

Smart contract

What is a smart contract?

Smart contracts are pieces of code that automate applications running on a blockchain. The contracts will self-execute when the conditions set within the contract will be satisfied. With smart contracts, there are no third parties involved unlike regular apps for example. They also offer transparency and security to users.

Smart contracts usually use the Ethereum blockchain. For example, decentralized exchanges (DEXs) or decentralized applications (DApps) use smart contracts to run on the blockchain. Also, tokens such as ERC-20 tokens are smart contracts themselves.

However smart contracts are not always safe. Indeed, they can contain flaws in their code. Malevolent actors can use these flaws to take advantage of the smart contracts. This is why specialized companies often audit smart contracts before their launch.