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Life Cycle of Smart Contract

The life cycle of Smart Contracts in the Blockchain Ecosystem involves four Stages. Unlike a blockchain’s lifecycle that begins with defining the issue, you want to solve with your blockchain product and ends with a blockchain that resolves the issue, a smart contract on the blockchain undergoes different phases. These four phases are the formation of a smart contract, freezing of the smart contract, execution of the smart contract, and finalization of the smart contract.

What Are Smart Contracts?

Smart contracts are simply programs stored on a blockchain that run when predetermined conditions are met. Smart Contracts are intended to automatically execute an agreement. Smart contacts are written in high-level languages such as Solidity and Vyper. They are used for applications in finance, gaming, healthcare, real estate, etc.

Phases of Smart Contract Life Cycle

There are four phases of the smart contracts life cycle in the blockchain ecosystem:

 Let’s look at each of these phases in detail.

Lifecycle of Smart Contracts

1. Create: Contract reiteration and negotiation constitute a significant part of the first phase. First, the parties must agree on the contract’s overall content and goals. This can be done online or offline. This is similar to traditional contract negotiations. On the blockchain being used to draw up the smart contract, all participants must have a wallet. Once the contents of the smart contract have been finalized, they must be converted into code.

The following tasks are done in this phase:

2. Freeze: Validation of the transactions on a blockchain is done by a set of computers across the network called nodes. These nodes are the blockchain miners. A small fee must be paid to the miners in exchange for this service to keep the ecosystem from being flooded with smart contracts. The smart contract and its participants become open to the public on the public ledger during the ‘freeze’ phase. Digital assets of both involved parties in the smart contracts are locked via freezing the corresponding digital wallets, and nodes operate as a governance board that verifies whether the preconditions for smart contract execution have been satisfied.

The following tasks are done in this phase:

3. Execute: Participating nodes read contracts that are stored on the distributed ledger. The integrity of a smart contract is verified by the authenticating nodes, and the code is executed by the smart contract’s interference engine (or by the compiler). When the inputs for the execution from one party are received in the form of coins (commitment to goods through coins), the interference engine creates a transaction triggered by the met criteria.

Now the new transaction data is added to the blockchain and to ensure fulfillment according to the agreed-upon terms in the Smart contract the governing nodes now verify it again. ‘Consensus mechanism’ governs this verification process.

The following tasks are done in this phase:

4. Finalize: After a smart contract has been executed, the new states of all involved parties are updated. Now the updated state information and resulting transactions are put in the distributed ledger of the blockchain and the consensus mechanism verifies that the assets transferred by the first party have been received and unfreezes the assets for the receiving party.

The following tasks are done in this phase:

The smart contract has completed the whole life cycle. During freezing, execution, and finalization the sequence of transactions has been executed and stored in the blockchain.

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