What is a Smart Contract?. A smart contract is code that lives on a blockchain and executes exactly as written. Once deployed, its rules apply automatically when users call its functions.
How it works
Contracts store state and functions. When a transaction invokes a function, nodes run the code and update the state consistently across the network.
Why it matters
Smart contracts enable exchanges, stablecoins, lending, lotteries, and on‑chain governance without a central operator.
Common pitfalls
- Interacting with unverified or unaudited contracts
- Granting unlimited token approvals
- Assuming code cannot have bugs
Quick example
You deposit tokens into a lending contract and start earning interest; all rules are enforced by code, not by a company clerk.
See also
- EVM
- Smart Contract Audit
- Governance Token
TL;DR: What is a Smart Contract? defined in plain English with practical next steps.
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