DeFiBreakdown 17 - Smart contract & DeFi.
14 Nov 2022, 10:24
DeFiBreakdown 17 - Smart contract & DeFi
Smart contracts are one of the key components of many blockchain ecosystems and an especially crucial element of many Dapps and DeFi space, representing a major focal point of blockchain development in general.
In the context of DeFi, smart contracts are used mainly to ensure the atomic transfer of two assets or to hold collateral, supporting borrowing & lending. They are also used for token issuance functionality.
The increased adoption of smart contracts in DeFi was triggered by increased speed and lower costs of operations. They also help to prohibit intervention and manipulation and boost trust & transparency since all participants can observe the rules before they engage.
However, much like other crypto concepts, there are concerns over the susceptibility of smart contracts to cyber-attacks and other inherent risks.
To mitigate these risks, users should carry out due diligence before subjecting funds to smart contract-powered protocols.