What Role Do ‘Smart Contracts’ Play in a DeFi (Decentralized Finance) Proof of Concept?

Smart contracts are self-executing contracts with the terms of the agreement directly written into code. In a DeFi PoC, they automate the core logic of the financial service, such as lending, borrowing, or token exchange.

They prove the concept's ability to operate trustlessly and permissionlessly. The PoC validates the contract's security and intended functionality before deployment.