Arithmetic Precision Flaw

Definition ∞ An arithmetic precision flaw represents a coding error in a digital asset system or smart contract where numerical calculations yield inaccurate results due to improper handling of decimal or fractional values. This defect typically arises from the limitations of fixed-point or floating-point arithmetic in environments demanding exact financial computations. Such inaccuracies can lead to discrepancies in balances or incorrect transaction outcomes.
Context ∞ These flaws pose substantial security risks within decentralized finance (DeFi) protocols, potentially resulting in asset losses or improper distribution of funds. Developers frequently address this by employing integer-based arithmetic or specialized libraries designed for precise financial operations within smart contracts. News frequently highlights such vulnerabilities when they contribute to exploits or create instability within a protocol, underscoring the importance of rigorous numerical accuracy.