What Happens If There Is a Bug or Exploit in a Smart Contract’s Code?

If a bug or exploit exists in a smart contract's code, the consequences can be severe due to the immutable nature of blockchains. Attackers can exploit the vulnerability to trigger unintended behavior, such as draining funds, altering ownership, or freezing the contract entirely.

Since the code cannot be easily changed once deployed, the stolen funds are often unrecoverable. In extreme cases, rectifying the situation might require a contentious "hard fork" of the entire blockchain, as happened with "The DAO Hack" on Ethereum.