Decimal Normalization

Decimal Normalization is the process of converting different token representations or currency units into a common base before performing arithmetic operations. Since different tokens on a blockchain may use different numbers of decimals, such as 6 for USDC and 18 for WETH, attempting to add or compare them directly would lead to massive valuation errors.

Normalization involves scaling these values to a shared standard, often 18 decimals, to ensure that all inputs to a financial model are comparable and accurate. This is a foundational requirement for any multi-asset derivative platform, as it prevents the accidental mispricing of collateral or debt.

By automating this process within the protocol's core logic, developers remove the risk of human error during interaction with various asset types. It is a fundamental component of arithmetic safety in a heterogeneous asset environment.