Smart contracts are self-executing, programmable agreements stored on a blockchain, like those used by @BuildOnLumia for Lumia Towers. Written as code, they automatically enforce and execute terms when predefined conditions are met, eliminating intermediaries. Here’s how they work:

1. Creation: Developers code the contract’s rules (e.g., token distribution, ownership rights) using languages like Solidity. For Lumia Towers, smart contracts on Polygon’s blockchain manage tokenized real estate shares.

2. Deployment: The contract is uploaded to the blockchain (e.g., Polygon’s Layer 2), where it’s immutable and transparent, ensuring trust.

3. Triggering Conditions: When conditions are met (e.g., an investor sends funds), the contract executes automatically. For example, transferring ERC-20 tokens representing Lumia Towers ownership.

4. Execution: Actions like distributing rental income, enabling governance votes, or transferring tokens occur without manual intervention, reducing costs and errors.

5. Security and Transparency: Blockchain’s decentralized ledger ensures tamper-proof records, auditable by all parties.

Benefits include efficiency, trust, and cost savings, critical for Lumia’s $220M tokenized real estate project. Challenges include coding vulnerabilities and regulatory ambiguity. By leveraging smart contracts, @BuildOnLumia ensures transparent, scalable management of fractional ownership in the $10T RWA market.