How Does the Immutability of a Smart Contract Affect the Resolution of Disputes in Derivatives Trading?

Immutability, a core feature of blockchain, means that once a smart contract is deployed, its code cannot be altered. This rigidity can complicate dispute resolution.

In traditional derivatives trading, parties can renegotiate terms or rely on legal recourse to address unforeseen events or errors. With an immutable smart contract, a bug in the code or an unexpected market event cannot be easily corrected.

Disputes are often "resolved" by the code's execution, meaning the outcome is final, even if it's unintended. This shifts the focus from legal disputes to pre-trade code audits and security.