The role of smart contracts in DeFi
Smart contracts play a key role in DeFi (decentralised finance), enabling the automatic execution of agreements between participants without the need for trust in third parties.
Here's how they work in DeFi:
Automation: smart contracts automatically manage financial transactions (loans, asset swaps) when predefined conditions are met.
Transparency: All contract conditions are available on the blockchain, guaranteeing openness and preventing fraud.
Security: They eliminate intermediaries, reducing risks and transaction costs.
Smart contracts thus greatly improve the security and efficiency of financial operations in DeFi.