One approach to smart contracts is to allow full-featured software to be embedded either inside or alongside a blockchain, able to respond to blockchain events. This is an approach taken by Hyperledger Fabric, Ethereum, NEO, and other such companies. This approach gives maximum flexibility, as there is essentially nothing that cannot be written into the blockchain system. The downside of this power is the risk of making errors. The more options available, the more possible edge cases and permutations that must be tested, and the higher the risk that there will be an undiscovered vulnerability in the code.

The other approach to smart contracts is to greatly reduce the scope of what is possible in return for making things more secure and costly mistakes more difficult. The trade-off is currently flexibility versus security. For instance, in the Stellar ecosystem, smart contracts are made as sets of operations. In Stellar, there are only eleven operations:

• Create account
• Payment
• Path payment
• Manage offer
• Create passive offer
• Set options
• Change trust
• Allow trust
• Account merge
• Inflation
• Manage data

These operations themselves have multiple options and permutations, and so enable quite a large amount of behavior. However, it is not possible to easily use these operations to execute something such as the DAO, or some other on-chain governance organization. Instead, such functionality would have to be hosted off the chain. Similarly, there is no clear way in Stellar to manage the equivalent of ERC-721 tokens, which would track the equivalent of something such as trading cards or even pieces of real estate. Stellar's smart contract system is geared toward the transfer of fungible assets, such as currencies. As a result, it can scale very quickly, easily handle multisignature accounts and escrow, and process transactions in just a few seconds with high throughput. Ethereum is more flexible, but the multisignature capability, the tokens themselves, and so on would need to be created with software written in Solidity. Ethereum is obviously more flexible, but requires more code, and thus runs a higher risk of defects.