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Day 4 Introduction To Smart Contracts

The document provides an introduction to smart contracts, defining them as self-executing digital agreements that run on decentralized blockchain networks. It covers the architecture, lifecycle, and various virtual machine environments, particularly focusing on the Ethereum Virtual Machine (EVM). Additionally, it discusses gas mechanisms, economic implications, and diverse use cases of smart contracts in areas like DeFi, NFTs, and enterprise applications.

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jovic9002
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43 views49 pages

Day 4 Introduction To Smart Contracts

The document provides an introduction to smart contracts, defining them as self-executing digital agreements that run on decentralized blockchain networks. It covers the architecture, lifecycle, and various virtual machine environments, particularly focusing on the Ethereum Virtual Machine (EVM). Additionally, it discusses gas mechanisms, economic implications, and diverse use cases of smart contracts in areas like DeFi, NFTs, and enterprise applications.

Uploaded by

jovic9002
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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An Intro to

Smart
Contracts
Presented by:
Asante Ntiro
Agenda
WTF are Smart Contracts?
Virtual Machine Environments
Ethereum Virtual Machine (EVM) a closer look
Gas
Smart Contract Use Cases
Cool Resources for Further Learning
Q&A
SECTION 1:

WTF ARE SMART


CONTRACTS? 🤔
Smart contracts defined:
Self-executing digital agreements with terms written directly in
code.
Automatically execute when predefined conditions are met.
Run on decentralised blockchain networks.
Execute exactly as programmed without downtime, censorship, or
third-party interference.
"Smart contracts combine protocols with user interfaces to
formalise and secure relationships over computer networks." - Nick
Szabo (1994)
Technology that
enables: trustless,
automated agreements
Basically...

Programs that run on


blockchains 😅
Here’s some
historical
context!
1994
Nick Szabo first coined the
term "smart contracts"
2009
Bitcoin introduced limited
scripting capabilities
2015
Ethereum launched with Turing-
complete smart contract
platform
2020-Present:
Explosion of alternative smart
contract platforms
Smart Contracts vs. Traditional
Contracts
Traditional Contracts Smart Contracts

Paper-based or digital documents Computer code

Enforcement through legal system Self-enforcing through code

Human interpretation Deterministic execution

Third-party intermediaries Decentralized validation

Manual execution Automated execution


Does that mean that smart
contracts are just the digital
version of “paper” contracts??
Vitalik doesn’t think so!
Key Properties of Smart
Contracts
Immutability: Once deployed, code cannot be changed
Transparency: Code is visible to all network participants
Trustlessness: No need to trust counterparties or intermediaries
Deterministic: Same inputs always produce the same outputs
Distributed: Execution verified by multiple nodes
Smart Contract Architecture

Code: Logic written in specialised languages (Solidity, Vyper,


Soroban, MOVE... etc)

State: Current data values stored on the blockchain

ABI: Application Binary Interface that defines how to interact with


the contract

Bytecode: Low-level compiled code executed by the virtual machine


Lifecycle of a Smart Contract
1. Development: Writing and testing the contract code

2. Compilation: Converting high-level code to bytecode

3. Deployment: Publishing the contract to the blockchain

4. Execution: Functions called by users or other contracts

5. Termination: Self-destruct or permanent inactivity


SECTION 2:

VIRTUAL MACHINE
ENVIRONMENTS... 🖥️
What is a Blockchain Virtual
Machine?
1. Runtime environment for executing smart contracts

2. Abstraction layer between contract code and underlying blockchain

3. Sandboxed execution environment for security

4. State machine that transitions based on transactions

5. Consensus-based validation of execution


Major Virtual Machine
Environments
Ethereum Virtual Machine (EVM): Ethereum's runtime environment
Bitcoin Script: Bitcoin's limited scripting capabilities
Solana's Sealevel: Parallel smart contract runtime
WebAssembly (WASM): Used by Polkadot, NEAR, etc.
Cosmos SDK: Framework for building application-specific
blockchains
Move VM: Aptos and Sui's resource-oriented VM
EVM (Ethereum Virtual
Machine)
Architecture: Stack-based, 256-bit register machine
Languages: Solidity, Vyper
Features: Turing-complete, account-based
Adoption: Most widely used smart contract platform
Limitations: Sequential execution, limited throughput
Programming Language
Comparison
Platform Primary Languages Learning Curve Developer Experience

EVM Solidity, Vyper Moderate Extensive tooling

Bitcoin Script Steep Limited tooling

Solana Rust Steep Growing ecosystem

Polkadot Rust (for WASM) Steep Modern tooling

Cosmos Go Moderate Framework-focused


VM Trade-offs
Security vs. Flexibility:
More features = larger attack surface
Bitcoin Script: limited but secure
EVM: flexible but more vulnerable

Performance vs. Decentralization:


Higher throughput = more centralization
Solana: high performance, higher hardware requirements
Ethereum: more decentralized, lower throughput
SECTION 3:

EVM
A CLOSER LOOK 👀
EVM Architecture
Stack-based virtual machine
256-bit word size (optimized for cryptography)
Quasi-Turing complete (gas-limited)
Deterministic execution
Memory model: Stack, Memory, Storage
Accounts: External (users) and Contract accounts
EVM Architecture
Stack:
Temporary values during execution (limited to 1024
elements)
Memory:
Volatile linear memory (expanded as needed)
Storage:
Persistent key-value store (expensive to use)
EVM-Compatible Chains

Ethereum: Original EVM blockchain


BNB Chain: Binance's EVM-compatible chain
Base: Ethereum scaling solution (L2)
Optimism/Arbitrum: Layer 2 rollups for Ethereum
okay let’s get to the fun stuff!
**rubs hands
SECTION 3.2:

SOLIDITY BASICS... 🤖
LET'S OPEN UP

THE REMIX IDE

🕊️ ...
..
Contract Structure
Pragma directive: Specifies compiler version
Contract declaration: Similar to a class in OOP
State variables: Persistent storage
Functions: Code executed when called
Public, private, internal, external visibility
View, pure, payable modifiers
Events: Logging mechanism
Modifiers: Reusable code for function preconditions
SECTION 4:

GAS... 💸
Gas?

What do you think would


happen if we created an
infinite loop in a smart
contract?
If a smart contract had an unbounded or infinite
loop it could:
If a smart contract had an unbounded or infinite
loop it could:

deny service to other


users!
Gas!
Gas is the mechanism Ethereum uses to limit the
computational resources a transaction or smart contract can
consume.

Every operation in the Ethereum Virtual Machine (EVM) has a


gas cost.
Gas!
Unit of computational work in the EVM
Prevents infinite loops and DoS attacks
Incentivizes efficient code writing
Compensates validators for resources used
Creates market dynamics for transaction inclusion
Economic Implications of Gas
fees
Accessibility: High fees exclude small transactions
Prioritization: Creates market for transaction inclusion
Value capture: Validators/miners revenue
Network security: Fees contribute to security budget
Layer 2 solutions: Batching transactions to reduce costs
MEV (Maximal Extractable Value): Profit from transaction
ordering
SECTION 5:

SMART CONTRACT
USE CASES 🧰
DeFi (Decentralized Finance)

Automated Market Makers (AMMs)


Uniswap, Curve, PancakeSwap
Lending Protocols
Aave, Compound, MakerDAO
Stablecoins
DAI, USDC, FRAX
NFTs and Digital Ownership

Art and Collectibles


CryptoPunks, Bored Ape Yacht Club
Domain Names
ENS (Ethereum Name Service)
Membership Passes
Access tokens, event tickets
DAOs and Governance

Protocol Governance
Uniswap, Compound
Investment DAOs
MetaCartel, The LAO
Service DAOs
Developer DAOs, Creator DAOs
Social DAOs
Farcaster, Bankless
Supply Chain & Real-World
Assets
Product Provenance
Tokenized Real Estate
Agricultural Tracking
IBM Food Trust
Luxury Goods Authentication
Enterprise Applications

Document Verification
Certifications, credentials
Intellectual Property
Rights management, royalty distribution
Compliance and Auditing
Automated reporting
Tokenized Securities
Regulated token offerings
Other cool stuff..

Decentralized Science (DeSci)


Research funding, peer review
Social Networks
Decentralized reputation systems
Identity Solutions
Self-sovereign identity
Public Goods Funding
Quadratic funding, impact certificates
Key Takeaways:
Smart contracts are self-executing agreements with code-defined

terms

Multiple VM environments exist with different trade-offs

The EVM is the most widely adopted smart contract platform

Gas fees create economic incentives and security measures

Use cases span finance, art, governance, and beyond

The technology is still evolving rapidly


Resources for Further
Learning
Documentation:
Ethereum.org Developer Resources
Solidity Documentation (latest version)
Ethereum Study Group Wiki -> 🌟
Practice Platforms:
Remix IDE
CryptoZombies
SpeedRunEthereum -> 🌟
DUNIA YETU find me on x:
www.youtube.com/@DuniaYetu-TZ @AsanteNtiro

Thank you..

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