Smart Contract

A smart contract is code deployed on a blockchain (most commonly Ethereum) that automatically executes when conditions are met. In DeFi lending, smart contracts hold pledged collateral, calculate LTV in real time, and trigger liquidation if thresholds are breached — all without human intervention.

Smart contracts offer transparency (anyone can read the code) and speed (transactions settle in minutes), but introduce smart-contract risk: bugs, hacks, and oracle failures have drained billions from DeFi protocols. There's also no customer support line if something goes wrong.

Why it matters for Milo customers

Milo is a regulated CeFi lender — your loan is governed by a legal contract, not a smart contract. This means you get human underwriting, dispute resolution, and protection against smart-contract bugs. The trade-off versus DeFi is slower onboarding (KYC, document review) in exchange for legal protections smart contracts can't provide.

Related terms

Oracle (Crypto)LiquidationCustodianNon-Bank Lender
Short-Term vs. Long-Term GainsStablecoin

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