Logic Specification Errors

Logic specification errors occur when the intended economic or functional rules of a smart contract are correctly implemented in code but fail to achieve the desired outcome due to flawed logic. In the context of decentralized finance and derivatives, this often involves mistakes in how margin requirements, liquidation triggers, or interest rate calculations are defined.

Even if the code runs without crashing, the underlying mathematical model or rule set might allow for unintended behavior, such as draining liquidity pools or allowing users to bypass collateralization requirements. These errors are distinct from syntax errors because the compiler accepts the instructions as valid.

They represent a fundamental mismatch between the protocol designer's intent and the automated execution. Addressing these requires rigorous formal verification and economic stress testing to ensure the rules align with market reality.