S4B Crypto Contest - Season 19

Greetings friends i welcome you all to my blog today thanks to @waqarahmadshah for organizing this contest.

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What is a smart contract?

Smart contract is a legal instrument which is self-executing and in which all the conditions of the contract are coded. Contractual: it can operate to automatically execute a contractual agreement or to enable the parties to negotiate or perform an agreement over the activity without the assistance of go-betweens.

Smart contracts, based on the blockchain system, guarantee openness and safety and cause special actions in case of defined conditions. Once they are implemented they cannot be changed hence bring about trust and eliminate the likelihood of fraud. It is instrumental in different disciplines including but not limited to finance, real estate, supply chain management and many others to transform agreements and their execution in the contemporary society.

What is the role of smart contracts in decentralizefinance (DeFi)?

Normally smart contract plays an important role in the daily running of decentralized finance and these smart contracts, driven on the blockchain platform, are rather self-executed and the security of the transactions can be guaranteed. DeFi markets involve the use of smart contracts in various activities such as lending, borrowing, trading and supplying of liquidity without having to trust other people. Smart contract also allow a various of tasks and operation in decentralized financial markets freeing the restrictions that cannot be programmed, are permissioned, costly and time consuming.

What security measures are essential for smart contracts?

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Some measures that have to be implemented on smart contracts are security Measures to minimize the weak points that smart contracts possess to ensure the security of digital assets. Some of the measures include the use of code reviews by the security personnel to discover some of the flaws in or exploitable points in the code, use of multiple key signatures especially for transactions, restricting the interaction with the smart contract to only authorized personnel, and the use of standard practices in developing smart contracts such as the use of the standard Ethereum Request for Comments 20 (ERC-20) for token contracts.

Also, on the appropriate roles, one can put in place means to stop operation in emergencies, which can be effective in preventing further malevolent actions. It is also necessary that smart contracts are updated severally to mitigate new vulnerabilities that may be found. Smart contract developers should also consider apply formal verification tools so that the correctness of smart contract written in Solidity can be proved mathematically so in conclusion, the permanent code audits as well as the access control, the secure evolution models, and the monitoring methods form together the basis of smart contracts’ security.