Audited Protocol

Definition ∞ An Audited Protocol refers to a blockchain-based system or smart contract that has undergone a formal security assessment by independent third-party experts. This process systematically reviews the protocol’s code, architecture, and operational logic to identify vulnerabilities, bugs, and potential security risks. The audit aims to verify the system’s adherence to best practices in security and functionality, providing a degree of assurance regarding its reliability and resistance to exploits. It is a critical step in establishing trust within the decentralized finance and broader digital asset landscape.
Context ∞ The prevalence of security incidents in the cryptocurrency space places significant emphasis on the importance of audited protocols. News frequently reports on new audits, their findings, and the subsequent impact on user confidence and project viability. A current debate centers on the limitations of audits, particularly concerning economic exploits or unforeseen interactions between complex protocols, prompting calls for continuous auditing and bug bounty programs.