SMART CONTRACT

Dr. S. Poornima
Why Smart Contracts?

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What is Smart Contract?

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What is Smart Contract?

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What is Smart Contract?

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Example: Smart Contracts

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Example: Smart Contract

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Example: Smart Contracts

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SMART CONTRACTS

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BITCOIN vs SMART CONTRACT

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BITCOIN vs SMART CONTRACT

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Distributed Program

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SMART CONTRACTs

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SMART CONTRACTs

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 DAPPS in Ethereum
• DAPP - decentralized application
• Application that is built for decentralized networks like Ethereum

• Combines two components:

• 1. Smart Contracts
• 2. User interface for executing transactions and contracts

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Programmatically access Ethereum networks
Ethereum Node

Code

Storage
Smart Contract 1

Ethereum Node Smart Contract 2

Code Accounts
web3.js JSON ‐ RPC geth / Infura
ethers.js Endpoints Storage
Smart Contract 1 Ethereum Node
User Web UI Ethereum
Smart Contract 2
Client/ Node Code

Accounts Storage
DAPP UI
Smart Contract 1

Smart Contract 2

Accounts

Ethereum Network
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(Mainnet / Testnet)
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 Smart Contracts
• Program that is executed in a decentralized setting.

• Acts on distributed ledger data.

• Output of the program depends on consensus of independent

participants executing it.

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 Ethereum Smart Contracts
• Program that reads data from the Ethereum ledger, performs
operations on it, and writes back the output to the ledger.
• Smart contracts are a type of Ethereum account.
• have a balance
• can send transactions over the network
• not controlled by a user, run as programmed
• User accounts interact with a smart contract by submitting transactions
that execute a function defined on the smart contract.

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 Compiler
Deploy
Bytecode Smart Contract
Compiler

Smart Contract Code

• Solidity
• Vyper
Execute

Application Binary
web3.js
Interface (ABI)

https://vyper.readthedocs.io/en/stable/
https://docs.soliditylang.org/en/v0.8.9/
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 Solidity
• High-level language for // SPDX-License-Identifier: GPL-3.0

implementing smart contracts

pragma solidity >=0.8.2 <0.9.0;

/**
• Statically typed * @title Storage
* @dev Store & retrieve value in a variable
• Supports inheritance * @custom:dev-run-script
./scripts/deploy_with_ethers.ts
• Libraries */
contract Storage {

• Complex user-defined types uint256 number;

• Syntax influenced by Javascript and /**

* @dev Store value in variable
C++ * @param num value to store
*/
function store(uint256 num) public {
number = num;
}

/**
* @dev Return value
* @return value of 'number'
*/
function retrieve() public view returns (uint256){
return number;
https://docs.soliditylang.org/en/v0.8.9/ }
}
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 Compiling Solidity
• solc compiler
• Compile .sol files to
bytecode
• Command line tool
• Remix editor
• Browser based
• Compile, emulate, deploy
contracts
• https://remix.ethereum.org/

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https://docs.soliditylang.org/en/v0.8.9/installing‐solidity.html#installing‐solidity
 Simple Storage Contract
// SPDX‐License‐Identifier: GPL‐3.0
pragma solidity >=0.7.0 <0.9.0;
contract Storage {
uint256 positivenumber;
function store(uint256 inputnumber) public {
positivenumber = inputnumber;
}
function readdata() public view returns (uint256){
return positivenumber;
}
}

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https://docs.soliditylang.org/en/v0.8.9/installing‐solidity.html#installing‐solidity
Dapps (Decentralized apps)

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Ethereum virtual machines and Gas

• How to handle infinite or very big loops in Ethereum coding

• Virus in form of smart contract
• What happens when smart contracts gain access to private information in
the pc

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GAS

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Decentralized Autonomous Organizations
(DAOs)
• DAO is an organization in which the decision‐making is not in the hands
of a centralized authority but preferably in the hands of certain
designated authorities or a group or designated people as a part of an
authority
• DAOs rely on smart contracts for decision‐making (governed by the
protocols embedded in a smart contract ), or refered as decentralized
voting systems—within the organization

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Hard and Soft Fork

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Challenges and Risks of Smart contract
• Esoteric Programming Languages – difficult to understand for all
• External Data Reliability – third part programs to perform functions
lead to operational risks
• High‐Stakes Flaws – costly errors – loss of users assets
• Relationships and Liability – unresolved legal – if any error, who
responsible and jurisdiction is questionable

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Summary of smart contracts
Benefits:
• Security
• Transparency
• Free from third party
Uses:
• Intellectual Possessions Rights using NFTs
• Property Rights
• Chain of Custody
• Signatures and Notarization

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