Assurance contracts are a mechanism that provides users with a form of guarantee regarding the outcomes of their investments or actions in a project. They allow individuals to stake an amount of cryptocurrency as collateral, which can be used to back a promised outcome.If the outcome does not occur as expected, the staked amount is lost. This creates a strong incentive for project developers or participants to deliver on their commitments, reducing the risk of failure or fraud. The concept aims to align the interests of parties involved, ensuring that project creators work harder to meet their objectives. By using assurance contracts, users can make informed decisions based on the reliability of a project, as the potential loss of their stake serves as a deterrent against unfulfilled promises. In summary, assurance contracts enhance accountability and trust within projects by providing a financial disincentive for non-performance. This contributes to a more reliable and responsible environment for investments and interactions in the ecosystem.