Smart Contract Escrow

Definition ∞ Smart contract escrow is a digital arrangement where a smart contract holds assets securely until predefined conditions are met. This automated system removes the need for a trusted third party in an escrow agreement, as the smart contract code itself enforces the terms of the agreement and releases funds only when all specified criteria are satisfied. It ensures that funds are held impartially and are released or returned based on verifiable on-chain events. This provides a transparent and tamper-proof method for facilitating agreements between parties.
Context ∞ Smart contract escrow is a foundational element in decentralized finance (DeFi) and is often highlighted in news concerning secure peer-to-peer transactions and automated agreements. Discussions frequently focus on the immutability and security auditing of these contracts to prevent vulnerabilities. Its adoption is growing across various applications, from real estate transactions to decentralized marketplaces, enhancing trust and efficiency.