How do token contracts work?
Understanding how contracts work within the world of cryptocurrency
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 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 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.