How Does Smart Contract Automation Work? Explained

By Author: alicia adley
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The utility of smart contracts evolves with time. To issue and transfer rights to blockchain-based tokens, the first wave of smart contracts was utilized. Developers later began to leverage oracle networks to create hybrid smart contracts, which use external data and off-chain computing within on-chain apps to enable new markets like DeFi, dynamic NFTs, and GameFi. Now, a new piece of infrastructure known as "keepers" is emerging, bringing with it new capabilities for smart contract automation. learn blockchain to know A to Z about the blockchain world.

What Is Smart Contract Automation?

On blockchains, smart contracts are deterministic programs. They include code that says, "If x event occurs, then activate y action." Smart contracts, on the other hand, are not self-executing, which means that their code will not run and effect state changes on a blockchain until triggered by an on-chain transaction. The external transaction acts as a "poke" to wake up the smart contract and start its logic, in the same ...
... way as clicking a mouse might start a computer program.

In some circumstances, end-users directly call on-chain functions via their own smart contract interactions. In a decentralized money market, for example, when a user wishes to take out a loan, their transaction to borrow tokens against their collateral directly triggers the loan issuance function to execute. This function will determine the maximum loan size for the user and then send borrowed tokens to their address. However, there are several cases where smart contracts must conduct on-chain activities to maintain the protocol's health and utility—with no direct user inputs to trigger them.

Keepers as a Service for Transaction Automation

Keepers are externally owned accounts (EOAs) that are rewarded for triggering smart contract execution based on predetermined parameters. Conditions are established in tasks and submitted to a keeper network by a development team, DAO, or protocol users, along with rewards contingent on keeper performance. Smart contract automation conditions are typically based on time (e.g., trigger x function every day at 5:00 pm EST) or events (e.g., activate y function only when the asset's price passes a particular threshold).

Keepers are smart contract automation bots that check conditions and execute transactions once certain predefined requirements are met. The keeper will frequently use off-chain compute to conduct the same smart contract function that it will finally call on-chain. When the function returns true, the keeper invokes it on-chain by issuing an on-chain transaction. When the function is invoked, the protocol's smart contract can verify the circumstances on-chain before the state changes, assisting in ensuring that the keeper is correct. As a result, smart contracts only run on blockchains when necessary and under well-defined parameters.

Wrapping up

Contracts govern most parts of our professional and personal life, and they are necessary for modern society to function.

Smart Contracts are highly important in Blockchain; they help to make transactions more safe and secure, as well as to run in an ordered manner. Not only that, but it makes other components, such as programs operating on various platforms, more accessible.
If you have ever caught yourself wondering how to become a smart contract developer, it’s time for you to enroll in a blockchain developer training course and get started with your journey.