Ever wonder what Hybrid Smart Contract is? What goes on your mind when you hear the word Hybrid smart contract?

A hybrid is anything that combines two concepts, and a smart contract is a digital, automated contract. Hybrid smart contracts are therefore virtual contracts; however, they differ from regular contracts. In that case, hybrid smart contracts are powered by two networks: the blockchain network and the Decentralized Oracle Network (DON).

A hybrid smart contract links Blockchain (on-chain) code with off-chain data and computation. It maintains the immutable and tamper-proof characteristics of a blockchain. It employs a decentralized oracle network (DON), allowing it to create agreements utilizing off-chain data.

Why Are Hybrid Smart Contracts Appropriate?

Hybrid smart contracts have already or may soon have an impact on a number of significant industries, including:

1. Identity:

Identifying information can be automatically confirmed while protecting privacy. DONs can carry out calculations validating a user's personal information without disclosing it to the public or counterparty or keeping it in an external system. Smart contracts can specify the necessary personal information and take action upon obtaining it.

1. Insurance:

Two-sided prediction markets that are based on pre-specified events can be used to facilitate parametric insurance. Smart contracts can specify the processes for premiums and claims. While DONs can link the contract to external data sources for quoting and arbitrating claims. DONs can also calculate risks, retrieve complicated risk assessment outputs and secretly validate IDs.

1. Gaming:

Gaming platforms automate the distribution of prizes and grant users full ownership of in-game items via NFTs. It also offers unambiguous evidence that every player has an equal chance of winning. DONs can provide tamper-proof randomness to enable provably unbiased games and fair prize distributions. Smart contracts can establish models for gameplay and reward distribution. DONs allow gaming dApps to handle game operations off-chain for improved speed and connect real-world data streams like IoT sensor reading for augmented reality.

1. Supply-chain:

Multi-party trade agreements that use verifiable data to automate operations across several systems, digitize product lines, and operate on a common ledger. Using a combination of privacy-preserving computations and external data feeds from IoT networks, web servers, other blockchains, and enterprise backends. DONs can track shipments, monitor quality control, verify customer identities, and trigger settlement payments. Smart contracts can outline the various obligations, payment terms, and penalties.

1. Finance:

Open financial markets are censorship-proof, transparent, and available everywhere. DONs can price goods and settle markets using external data. They carry out computations for optional features like transaction concealment, KYC verification, fair transaction ordering, and high-speed off-chain processing. Smart contracts can specify the terms of engagement for both the buyers and sellers.

1. Governance:

Distributed communities that manage pooled assets and shared infrastructure securely and fairly. DONs can offer external data and calculations to trigger profit sharing, deduct shared fees, validate identities to minimize Sybil attacks, verify membership commitments, or even automate decision-making. Smart contracts can design the complete governance architecture.

As hybrid smart contract development is interlinked with blockchain, it possesses larger support to any business and other industries. It performs significantly better than any other contract since it is both a smart contract and a DON.