Definition ∞ Model limitations describe the inherent constraints or boundaries within which a theoretical or computational model accurately represents a real-world system or phenomenon. These restrictions arise from simplifying assumptions, incomplete data, or the specific scope of the model’s design. Recognizing these limitations is essential for interpreting a model’s outputs correctly and avoiding overgeneralization. In digital asset analysis, model limitations often relate to predictive accuracy or the applicability of a security proof under various conditions.
Context ∞ Discussions around model limitations frequently surface in crypto news concerning market predictions, protocol security assessments, and economic analyses of decentralized finance. Reports often highlight how reliance on flawed or incomplete models can lead to incorrect conclusions or vulnerabilities in smart contracts. A critical area of focus involves continuously refining analytical models and clearly stating their scope, particularly as the complexity of digital asset markets and blockchain protocols rapidly progresses.
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