The Role of Smart Contracts in DeFi

Smart contracts play a key role in DeFi (decentralized finance), enabling the automatic execution of agreements between participants without needing third-party trust.

Here’s how they work in DeFi:

🔵 Automation: Smart contracts automatically handle financial operations (e.g., loans, asset exchanges) when predefined conditions are met.

🔵 Transparency: All contract terms are available on the blockchain, ensuring openness and preventing fraud.

🔵 Security: They eliminate intermediaries, reducing risks and transaction costs.

Thus, smart contracts greatly enhance the security and efficiency of financial operations in DeFi.