> For the complete documentation index, see [llms.txt](https://know.rendernetwork.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://know.rendernetwork.com/basics/how-do-token-contracts-work.md). # How do token contracts work? Token contracts are an essential element in the functionality of cryptocurrency projects, as core to the experience as the blockchain itself. Token contracts are versatile, coming in many forms depending on the use, but for the purposes of the Render Network, we'll break down the two different types of contracts that are most relevant to our project: "**Smart Contracts**" and "**Escrow Contracts**". ## Smart Contracts Smart contracts are executable programs built on the blockchain that manage the tokens they are linked to. The primary function of the majority of smart contracts is containing the terms of the agreement between the token provider and the token purchaser/user within the code, acting as an automatically executable agreement every time the token is issued from the contract or interacts with it. ## Escrow Contracts Escrow contracts function in the same way that escrow functions in the real-world, only instead of an entity like a bank or private lender holding until a condition is met, a contract holds the currency in question. In the case of the Render Network, when a Creator initiates a job, the tokens needed to pay the Node Operators for that job are held in Escrow until the work has been confirmed. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://know.rendernetwork.com/basics/how-do-token-contracts-work.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.