How Does Formal Verification Help in Preventing Bugs in Financial Smart Contracts?

Formal verification is a rigorous process of using mathematical methods to prove that a smart contract's code behaves exactly as intended according to a formal specification. Instead of just testing for some possible inputs (like in an audit), it mathematically checks all possible inputs and states to ensure the code is logically sound and free from certain classes of bugs, such as integer overflows or re-entrancy.

For high-value financial smart contracts, this process provides a much stronger guarantee of correctness and security than testing or manual code review alone.