What Is Smart Contract?
A smart contract is code deployed on a blockchain that executes automatically when its conditions are met. The most common platform is Ethereum and EVM-compatible chains (Polygon, Arbitrum, BSC), though many others exist (Solana, Cardano, Near).
Smart contracts power DeFi protocols (Uniswap, Aave, Compound), NFT marketplaces (OpenSea, Blur), and DAOs. Once deployed, the code is immutable on most chains — bugs become permanent unless an upgrade pattern was built in advance.
The biggest risks are coding bugs and economic exploits (flash loans, oracle manipulation, reentrancy attacks). Major hacks like the DAO ($60M, 2016), Poly Network ($600M, 2021), and Ronin ($625M, 2022) all targeted smart-contract vulnerabilities. Auditing is essential but not foolproof.
Related terms
- DeFi (Decentralized Finance) — Financial applications built on blockchain without traditional intermediaries.
- AMM (Automated Market Maker) — Smart contract that lets users trade against a pool of assets without counterparties.
- Yield Farming — Earning rewards by providing liquidity or staking in DeFi protocols.
- Gas Fee — Transaction fee paid to network validators to include your transaction on a blockchain.