S4B Crypto Contest - Season 19

Hello friends, I guess you are doing well. I am pleased to have you here.

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What is a smart contract?

Source

A smart contract is a program that has been designed to run automatically without the involvement of a term party. Generally speaking, Smart contact is a self-executing contract with terms of agreement that are directly written into lines of code to function automatically. The smart contract runs on a blockchain network meaning it decentralized and distributed ledger system. Below is how a smart contract works.

How smart contract works

As code contact: is translated into code, that defines the rules and penalties surrounding the terms of an agreement.

As a decentralized execution: smart contract is deployed on a blockchain network Ethereum blockchain is the first blockchain to make use of smart contracts to store and execute agreements.

Transparency and Security: Since smart contracts are built on the blockchain they cannot be changed it is trusted and reliable.

A Smart contract is used in several blockchain networks and applications like finance, supply chain, and decentralized applications.

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

In Decentralized finance (DeFi) smart contracts play a very important role by enabling the creation, and management of financial services and operations with the need of third parties or a traditional bank system.

The function of Smart contacts in decentralized finance includes the following* Lending and borrowing which allows users to lend and borrow currency without the involvement of third parties.

• Trading and exchange. It facilitates peer-to-peer trading of cryptocurrencies by matching buyers and sellers.
• Provide liquidity
• Yield farming and staking
• Issue stablecoins
• Governance
• Transparency and Security

Smart contracts in decentralized finance provide a wide range of financial services while ensuring decentralized transparency and security.

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What security measures are essential for smart contracts?

Smart contracts are powerful tools, which must be carefully secured to avoid being compromised or vulnerabilities that could lead the tool to significant financial losses or other issues. Below are some of the security measures for securing smart contracts.

• Code audits
• Formal verification
• Testnet deployment
• Minimise complexity
• Access control and permission
• On-Chain Monitoring and Alerts**

By implementing these security measures into smart contracts developers can significantly reduce the risk of vulnerabilities and enhance the performance and trust of smart contracts.

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I am inviting my friends; @dave-hanny, @woka-happiness, and @vickyson to also join me.

Cc:-
@waqarahmadshah