What Are Smart Contracts

Smart contracts are programs that run on a blockchain. They execute automatically when conditions are met, without needing anyone to press a button.

A Simple Analogy

Think of a vending machine. You put in money, select a product, and the machine dispenses it. No cashier needed. The machine follows its programming.

Smart contracts work the same way, but for financial transactions. Put in USDC, receive property tokens. Claim your yield, receive USDC. The contract executes the rules automatically.

Why Smart Contracts Matter

No Middleman

Traditional property transactions require lawyers, brokers, and banks. Each adds time and cost. Smart contracts can handle transfers directly, reducing friction.

Transparent Rules

The code is public. Anyone can read exactly what a smart contract does. There is no fine print or hidden terms. The rules are visible on the blockchain.

Automatic Execution

When conditions are met, the contract executes. No one needs to approve it. No one can stop it. This removes counterparty risk. You do not need to trust that someone will follow through.

Immutable

Once deployed, smart contracts cannot be changed. The rules are permanent. This means you can rely on them behaving consistently.

Smart Contracts on OpenHouse

OpenHouse uses several smart contracts:

Property Share Token

Tracks who owns how many tokens. When you buy or sell, this contract updates ownership records.

Token Sale

Handles purchases during the primary sale. Takes your USDC, sends funds to the right places, mints tokens to your wallet.

Liquidity Pool

Enables secondary trading. Holds USDC and tokens. Executes swaps when you buy or sell.

Yield Distributor

Distributes rental income. Verifies your entitlement and sends USDC when you claim.

Compliance Registry

Tracks KYC-approved investors. Other contracts check this before allowing purchases or transfers.

What Smart Contracts Cannot Do

Smart contracts only know what is on the blockchain. They cannot:

• Access bank accounts

• Verify your identity (they rely on external KYC services)

• Know real-world events (like rent being collected)

• Fix themselves if there is a bug

For real-world data, smart contracts rely on "oracles" or manual updates from authorised accounts.

Security Considerations

Smart contracts are powerful but permanent. If there is a bug, it cannot be patched like normal software. This is why:

• Contracts are audited before deployment

• Many contracts have pause functions for emergencies

• Testing is extensive before launch

OpenHouse contracts are audited and include safety mechanisms, but no code is guaranteed bug-free.

You Do Not Need to Understand the Code

Smart contracts run in the background. As a user, you interact with the OpenHouse interface. The platform handles all contract interactions.

What matters is understanding what the contracts do, not how they are coded. The contracts enforce the rules of how property shares work: ownership, transfers, yield distribution.