Definition
A smart contract is code deployed to a distributed ledger that executes defined state changes when transactions satisfy its programmed conditions.
In market context
Smart contracts can issue tokens, manage swaps, hold collateral, or coordinate applications without a conventional manual processor for each action. Their behavior depends on code, permissions, upgrade controls, external data, and the underlying network. Deployment does not prove correctness or fairness; a defect, compromised administrator, malicious token, or faulty data feed can produce rapid and irreversible losses without effective recourse.
Risk context
Code execution can be technically correct while producing an outcome the user did not understand or intend.
Source
Use the primary source for fuller regulatory or market context.