Definition ∞ A third-party audit is an independent review conducted by an external, unbiased entity. This examination assesses the security, functionality, or financial integrity of a system, smart contract, or set of records. In the digital asset space, these audits are critical for identifying vulnerabilities in code, verifying compliance with standards, and assuring stakeholders of a protocol’s reliability. Such independent verification helps build trust and mitigate risks associated with decentralized applications.
Context ∞ Third-party audits are a critical component of security assurance in the digital asset space, regularly highlighted in crypto news, especially for new decentralized finance protocols. Projects often publicize audit results to demonstrate their commitment to security and transparency. The absence or inadequacy of such audits can raise significant concerns for users and investors regarding the safety of funds and protocol stability.
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