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What Is the Most Common Trigger for Smart Contract Execution?
Discover how smart contracts are triggered by various inputs, from direct user communication to external data. Learn why external data from oracles is considered the most common trigger for executing the conditional logic within smart contracts.
Question
Explain how smart contracts are triggered by various inputs. What type of input most commonly triggers a smart contract?
A. Randomized inputs generated by the blockchain.
B. Direct communication from users.
C. Manual activation by developers.
D. External data from oracles.
Answer
D. External data from oracles.
Explanation
While user input can affect smart contracts, external data from oracles typically triggers them.
Smart contracts are self-executing programs that run on a blockchain, but they are isolated from the outside world. They cannot independently access off-chain information such as stock prices, weather conditions, or flight statuses. This is where oracles come in.
An oracle is a third-party service that acts as a bridge between the blockchain and the real world. It finds and verifies real-world data and feeds it into the smart contract. This external data then serves as a trigger that causes the smart contract to execute its pre-defined conditions.
For example, a crop insurance smart contract could be triggered to automatically pay a farmer if an oracle provides data confirming a drought in their region. Similarly, a decentralized finance (DeFi) protocol might automatically liquidate a loan if an oracle reports that the value of the collateral has dropped below a certain threshold. While a user initiates the creation of the loan contract, the liquidation event is triggered by the external price data from the oracle.
Analysis of Incorrect Options
B. Direct communication from users: This is a partially correct but incomplete answer. All transactions on a blockchain must be initiated by a user with an external account. However, while a user might start a transaction (e.g., taking out a loan), the most critical subsequent actions are often triggered automatically by external events, not further user input. In the context of complex automated agreements, oracle data is the more common trigger for the contract’s core logic.
C. Manual activation by developers: This contradicts the primary purpose of a smart contract, which is automation. Relying on manual activation by developers would reintroduce the need for a trusted intermediary and eliminate the efficiency and trustless nature of the contract.
A. Randomized inputs generated by the blockchain: Blockchains are deterministic, meaning they do not have a built-in source of true randomness. Generating unpredictable numbers on-chain is a complex problem and not a common trigger for the vast majority of smart contracts.
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