How Does Immutability Affect the Terms of a Deployed Smart Contract?
Immutability means that once a smart contract is deployed to the blockchain, its code and the terms embedded within it cannot be altered or changed. This feature is fundamental for trust, as it guarantees that the rules of the financial agreement will not be manipulated mid-trade.
For financial derivatives, it ensures that the strike price or expiration date is fixed and unchangeable. However, it also means any bugs or errors in the original code are permanent and cannot be easily patched.
Glossar
Expiration Date
Deadline ⎊ The Expiration Date marks the definitive deadline for the option contract, after which the right to exercise or the obligation to perform ceases.
Strike Price
Reference ⎊ The Strike Price is the predetermined reference level set at the contract's inception against which the underlying crypto asset's spot price is compared at expiration or exercise.
Immutability
Record ⎊ Immutability within cryptocurrency, options, and derivatives signifies the unalterable nature of transaction histories and contract terms once committed to a distributed ledger or executed on a blockchain.
Smart Contract
Code ⎊ The contract is fundamentally self-executing code deployed on a distributed ledger, embodying the terms of the agreement in an immutable format.