Smart Contract
Self-executing code deployed on a blockchain that automatically enforces the terms of an agreement when predetermined conditions are met.
Full Definition
Smart contracts are programs stored on a blockchain that run when triggered by transactions meeting specific conditions. For security tokens, smart contracts encode compliance rules (investor eligibility, transfer restrictions, holding periods), automate corporate actions (dividends, voting), and maintain the cap table. Once deployed, the rules execute automatically without intermediaries, providing transparency and reducing operational costs.
Why It Matters
Smart contracts are what make security tokens more than just "stocks on blockchain." They enforce rules automatically: if someone tries to transfer tokens to a non-KYC'd wallet, the contract rejects it. When dividends are due, the contract calculates and sends them to every holder instantly.
On Sails.to, our smart contracts on Solana handle everything from compliance checks to cap table management. The rules are transparent, auditable, and execute the same way every time—no human error, no delays, no favoritism.