The rise of blockchain technology, especially the type used by Ethereum (CRYPTO: ETH), has caused smart contracts to skyrocket in popularity. For the uninitiated, smart contracts are programmable agreements, or protocols, that self-execute and enforce without the aid of any intermediaries. Other than the fact that they do not require a middleman (like a lawyer), they are not so different from regular contracts.
Long story short, smart contracts are at the heart of the $200 billion decentralized finance (DeFi) industry. Let's take a look at how they work, and how they can enrich investors' blockchain portfolios.
Image source: Getty Images.
Source Fool.com