Glossary · Crypto
Smart contract
A smart contract is a program stored on a blockchain that runs automatically when its conditions are met, moving coins or data exactly as its code says.
Also called: dapp, decentralized app, on-chain program
Paid to run Ethereum’s programs and payments, then destroyed: about $9.54B at the latest price.
In plain words
A vending machine is a contract without a lawyer: put in $2, press B4, and the machine hands over a drink. Nobody has to trust a shop assistant; the machine just follows its rules. A smart contract is the same idea in software, running on a blockchain.
Its code and its money sit on the blockchain, where anyone can read them. When someone sends it a transaction, every computer in the network runs the code and agrees on the result: “if 1 ETH arrives, send back 3,000 tokens”, or “if the loan is not repaid by Friday, sell the collateral”.
The computer scientist Nick Szabo described smart contracts in the 1990s; Ethereum made them practical in 2015. They run stablecoins, DeFi lending and trading, and NFTs.
Example
An escrow for a used bike
- Ana sells Ben a bike for 0.5 ETH (about $1,025 at the latest price). Neither trusts the other, so they use a contract.
- Ben sends the 0.5 ETH to the contract, which locks it.
- When Ben confirms the bike arrived, the contract pays Ana at once. If Ben neither confirms nor complains within 14 days, it pays Ana anyway; if he complains, it hands the case to an arbiter both chose.
- Each step costs gas: a call using 50,000 gas at 10 gwei costs 0.0005 ETH, about $1.03.
The contract cannot see whether the bike really arrived; it only knows what someone tells it. Code is exact, but only as good as its inputs.
One level deeper
A smart contract cannot be changed once deployed, unless its code was written to allow upgrades. That is a strength (nobody can quietly rewrite the rules) and a danger (a bug cannot simply be patched). In 2016 a flaw in The DAO, a contract holding about 14% of all ether, let an attacker drain about 3.6 million ETH.
Contracts know only what is on their own blockchain. To use outside facts, such as a dollar price or a sports score, they rely on oracles: services that post the data on the chain, and which then become a point of trust.
Running code on thousands of computers is slow and costly, so every step costs gas. Since August 2021 part of every fee is burned; the chart shows how much ether that destroys each day.
Ether burned in fees a day, since 2021
How busy are Ethereum’s programs? Every transaction pays a base fee that is burned, so the ether destroyed each day tracks the demand for space in Ethereum’s blocks. The burn was highest in the 2021–22 boom and has fallen to a small fraction of that since spring 2024, as much activity moved to cheaper layer-2 networks.
The numbers behind the chart
| Date | Ether burned a day |
|---|---|
| Aug 2021 | 5,690 |
| Dec 2021 | 7,982 |
| Dec 2022 | 1,533 |
| Dec 2023 | 4,111 |
| Dec 2024 | 1,566 |
| Dec 2025 | 34 |
| Nov 2026 | 47 |
Why it matters
They let people make deals without trusting each other or a middleman, as long as the deal can be written as code.
Most of crypto beyond bitcoin is built from them: tokens, stablecoins, exchanges, lending.
Their flaws are costly: bugs in smart contracts have let attackers take billions of dollars, because a bug is also a door.
A common mistake
Myth: A smart contract is a legal contract.
In fact: It is a program, not a legal agreement. It does exactly what the code says, which is not always what the people using it meant, and courts do not automatically treat it as a contract.
Questions people ask
What language are smart contracts written in?
On Ethereum mostly Solidity, which is compiled into code for the Ethereum Virtual Machine. Other blockchains use languages such as Rust and Move.
Are smart contracts safe?
The blockchain runs them faithfully; the risk is in the code. Audits catch many bugs but not all, and contracts that hold a lot of money attract attackers.
Can a smart contract be changed?
Only if it was built to be: many contracts let their owners swap in new code, which adds flexibility but means trusting those owners. Others are fixed for good once deployed.
Read more on BigCapital
About the numbers
- The numbers on this page are recalculated from the data every night; the sources are listed at the end of the page.
- New ether per day: Coin Metrics Community Network Data, metric IssTotNtv. License: CC BY-NC 4.0.
- Ether supply: Coin Metrics Community Network Data, metric SplyCur. License: CC BY-NC 4.0.
- Ethereum price: Coin Metrics Community Network Data, metric PriceUSD. License: CC BY-NC 4.0.
- Burned ether is calculated as new ether issued minus the change in the supply; single days can be noisy, so the chart shows monthly averages.
- Crypto data: Coin Metrics Community Network Data, used under the CC BY-NC 4.0 license.
- This page explains a term. It is not investment advice.