Crowdfunding Contracts

Definition ∞ Crowdfunding Contracts are smart contracts deployed on a blockchain to automate the process of raising capital from a large number of individuals. These contracts define the terms, conditions, and distribution mechanisms for funds collected during a crowdfunding campaign. They ensure transparency and immutability of the fundraising process, with funds often released automatically upon meeting predetermined goals. Such contracts reduce reliance on intermediaries and enhance trust through programmatic execution.
Context ∞ The use of crowdfunding contracts has gained prominence in the decentralized finance space for project funding and token sales. News frequently highlights successful or problematic initial coin offerings and decentralized autonomous organization funding rounds facilitated by these contracts. Regulators globally are assessing how existing securities laws apply to crowdfunding contracts and the digital tokens they distribute.