How Are Disputes Resolved in Agreements Governed by Smart Contracts?

Dispute resolution for smart contracts is a developing area. Since smart contracts are self-executing and immutable, traditional dispute resolution is challenging.

One approach is to use on-chain arbitration services, where a decentralized group of arbiters can vote on a dispute's outcome. Another method is to code specific dispute resolution mechanisms directly into the smart contract itself, which could trigger a predefined action if certain conditions are met.

Often, parties rely on an external legal agreement that specifies how disputes related to the smart contract will be handled through traditional legal channels.