Can you explain the role of smart contracts in decentralized finance (DeFi) on Ethereum?

3 answers

• Lurian OrsinaDec 09, 2020 · 5 years ago
  Smart contracts are self-executing contracts with the terms of the agreement directly written into code. In the context of decentralized finance (DeFi) on Ethereum, smart contracts enable the automation of financial transactions and eliminate the need for intermediaries. They allow users to create and interact with various financial applications, such as lending platforms, decentralized exchanges, and yield farming protocols. By using smart contracts, DeFi applications can operate transparently and securely, ensuring that transactions are executed as intended without the risk of censorship or manipulation.
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• Hoover BynumSep 20, 2021 · 4 years ago
  Smart contracts are like digital agreements that run on the Ethereum blockchain. They enable decentralized finance (DeFi) by automating financial transactions and removing the need for intermediaries. With smart contracts, users can participate in lending, borrowing, trading, and other financial activities directly from their wallets. This opens up new opportunities for individuals to access financial services without relying on traditional banks or financial institutions. Smart contracts also enhance transparency and security, as all transactions are recorded on the blockchain and cannot be altered or tampered with.
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• San ANov 26, 2022 · 3 years ago
  In decentralized finance (DeFi) on Ethereum, smart contracts are the backbone of the ecosystem. They enable the creation and execution of financial applications without the need for intermediaries. Smart contracts ensure that transactions are executed according to predefined rules and conditions, eliminating the risk of fraud or manipulation. They also enable the composability of different DeFi protocols, allowing users to combine and interact with multiple applications seamlessly. Smart contracts have revolutionized the way we think about finance, empowering individuals to have full control over their assets and participate in a global, permissionless financial system.
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