What Is ‘Code Is Law’ in the Context of Decentralized Finance?

'Code is law' is the principle that the rules and logic embedded in the smart contract code are the ultimate authority and arbiter of all transactions and agreements within the DeFi protocol. It implies that the code's execution is final and overrides any external human or legal intervention.

This forms the foundation of trustless systems, where trust is placed in the audited code, not in people or institutions.