How Can Smart Contracts Use Hashing to Ensure Fair Derivative Settlement?

Smart contracts can use hashing to ensure fair derivative settlement by cryptographically committing to data inputs and contract terms. The contract's code, the oracle data (like the settlement price), and the execution logic can all be hashed and stored.

Hashing the oracle data before it's used ensures that the data cannot be retroactively changed without invalidating the settlement hash. This immutable record of the data used for settlement provides a transparent and auditable mechanism for fairness, reducing counterparty risk.