Various forms of algorithm contracts -Part 2


Si Gyeongmin

Oct 12, 2021

Secondly, Dynamic Pricing.

Dynamic pricing uses information about the market, product, and buyer to set the price to the highest price that the buyer is willing to pay. The most classic form of dynamic pricing is airline ticket quotations, which customize price terms for buyers based on personal information, departure time, distance, and airline prices. The price discrimination of dynamic pricing is usually concerned, and the policy of algorithmic contracts is also reflected here.

Finally, Ethereum and "Smart Contracts".

Compared with high-frequency trading and dynamic pricing, smart contracts can better expose the limitations of current contract law in algorithmic contracts. Smart contracts eliminate the need for trust between parties. Smart contracts can be self-fulfilling, and the contract is the code. The contract is defined by the code and is automatically fulfilled by the defined code. There is no human intervention for participation and decision-making.

The difference between smart contracts and other forms of algorithm contracts is that Ethereum has the ability to create so-called "decentralized autonomous organizations" (DAOs). DAOs operate according to the rules and regulations clearly explained in the interrelated software code rather than the agreement charter. DAOs operate completely in a programmed manner, and there is no opportunity for third-party interference or fraud. However, the contract concluded by DAOs may not be fulfilled because the investors of DAOs intend to be very different from the contracting behavior of DAOs.


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