In the DeFi space, everybody has heard about Smart Contracts. But why are they called contracts? And are they really that smart? Let’s dive into that together.
What is a contract?
We all probably know what a conventional contract is. A contract is traditionally an exchange of legally enforceable agreements between two or more parties, that can be individuals or legal entities. Traditional contracts most commonly exist in the form of a written document, and they uniquely identify the contracting parties and explicitly state the terms of the agreement which, once they are met, trigger a set of consequences, or outcome.
One common issue with traditional contracts is that they frequently poorly specify the parties’ commitments, and they lack the ability to manually track the status of the commitments. This means that the contractual relationship between the parties is often subject to conflict, and the resulting resolutions can be very expensive and even bring down an entire commercial relationship.
What makes a contract smart?
A blockchain, in simple terms, is a shared database that stores transactions and events in an immutable and tamper-proof way. Thanks to blockchain technology, interaction between parties is facilitated to the point that two or more parties are able to carry out agreements that demand high reliability in any circumstance, even if there is little to no trust in the other parties.
Smart contracts are automatic programs that run on top of a blockchain and that can read and recognize transactions and events, and create new ones based on predetermined triggers.
Doesn’t that sound familiar? Just like traditional contracts, smart contracts are a means of making sure every party of an agreement remains true to their commitment.
Thanks to blockchain immutability and computer automation, no party can fall short of their promises even if they wanted to. This allows parties to undertake binding agreements without the need for third-party supervision and gives them the peace of mind that their counterpart will accomplish their promise in any situation, given that the triggers for it are met. Isn’t that smart?
The unfair advantage
Uniqo has gone one step further, and based its Protocol on a smart contract that has an unfair advantage compared to the current state of DeFi. It is a Self-Aware Smart Contract (SASC).
A smart contract is generally called self-aware when it has a high level of automation that allows it to be aware of both its internal and external environment. In Uniqo’s case, the great innovation is its ability to keep track of certain internal parameters like inflation, and take action in case its value should exceed certain predetermined thresholds.
Many DeFi protocols are programmed in a way that makes them “set and forget”. Uniqo’s smart contract, on the other hand, continuously monitors itself and evolves over time with the goal of protecting investors’ assets and maximizing their profitability.
Be with Uniqo, Stay for the revolution!
Uniqo Docs | Self-Aware Smart Contract: https://docs.uniqo.finance/protocol-features/self-aware-smart-contract
