How Does a Smart Contract Automate the Settlement of a Traditional Futures Contract?
For a cash-settled futures contract, the smart contract automates settlement by using a reliable oracle to fetch the final price of the underlying asset on the contract's expiration date. The contract then automatically calculates the profit or loss for both the long and short parties based on the difference between the initial contract price and the final settlement price.
It then uses its internal logic to transfer the corresponding funds from the margin accounts to the winning party, all without any manual intervention.
