Smart Contract Audit The initial step is the team and the auditing group agreeing on the scope and specifications of the audit. It means that the design, purpose, architecture and other details of the smart contract are given to the auditors. Next is the testing phase, where the auditors test the individual functions (unit tests) and then larger parts (integration tests). Automated bug detection and analysis tools are also used to look for commonly known vulnerabilities in the contracts. Finally, auditors manually inspect the code to understand the developer’s intentions and interpret the findings in that context. Finally, the report is issued with the findings and the applied fixes by the team.
A smart contract security audit examines and comments on a project’s smart contract code. Typically, these contracts are written in Solidity programming language and provided via GitHub. Security audits are particularly valuable for DeFi projects that expect to handle blockchain transactions worth millions of dollars or a huge amount of players. The audits usually follow a four-step process:
Smart Contract Audit
Smart Contract Audit
Smart Contract Audit service in UAE
A smart contract audit is an extensive methodical examination and analysis of a smart contract’s code that is used to interact with a cryptocurrency or blockchain. This process is conducted to discover errors, issues and security vulnerabilities in the code in order to suggest improvements and ways to fix them. Generally, smart contract audits are necessary, because most of the contracts deal with financial assets and/or valuable items.
Such checks are complex, as smart contracts often interact with each other and any integrations with third-party systems can also result in making the system vulnerable. Because of this, the checks are often expanded to other smart contracts involved in any interactions, and even those that the ones it interacts with are interacting with. Such checks usually include both running tests and manual code analysis.
Smart contracts often manage huge quantities of funds and a single bug or vulnerability can result in great losses. More precisely, the users and stakeholders of the decentralized application in question could lose all the assets that are part of the ecosystem.
The initial step is the team and the auditing group agreeing on the scope and specifications of the audit. It means that the design, purpose, architecture and other details of the smart contract are given to the auditors. Next is the testing phase, where the auditors test the individual functions (unit tests) and then larger parts (integration tests).
Automated bug detection and analysis tools are also used to look for commonly known vulnerabilities in the contracts. Finally, auditors manually inspect the code to understand the developer’s intentions and interpret the findings in that context. Finally, the report is issued with the findings and the applied fixes by the team.
A smart contract security audit examines and comments on a project’s smart contract code. Typically, these contracts are written in Solidity programming language and provided via GitHub. Security audits are particularly valuable for DeFi projects that expect to handle blockchain transactions worth millions of dollars or a huge amount of players. The audits usually follow a four-step process:
Smart contracts are provided to the audit team for initial analysis.
The audit team presents their findings to the project for them to act upon.
The project team makes changes based on the issues found.
The audit team releases their final report, considering any new changes or outstanding errors
For many crypto users, smart contract audits are essential when investing in new DeFi projects. It’s become a standard for projects that want to be taken seriously. Certain audit providers are also seen as industry leaders, making their audits more valuable in investors’ eyes.
Why do we need smart contract audits?
With vast amounts of value transacted through or locked in smart contracts, they become attractive targets for malicious attacks from hackers. Minor coding errors can lead to huge sums of money being stolen. For example, the DAO hack on the Ethereum blockchain took roughly 60 million dollars worth of ETH and even led to a hard fork of the Ethereum network.
Since blockchain transactions are irreversible, making sure that a project’s code is secure is essential. Blockchain technology’s highly secure nature makes it difficult to retrieve funds and resolve issues after the fact, so it’s better to prevent vulnerabilities at all costs.
The process of a smart contract audit is fairly standard among audit providers. While each auditor’s approach may differ slightly, the typical process is as follows:
1. Determine the scope of the audit. The smart contract and project specifications are defined by the project (their intended purpose) and the overall architecture. A specification helps the audit team understand the project’s goals when writing and using the code.
2. Provide an initial quote based on the amount of work needed.
3. Run tests. Their exact nature will change depending on the auditing team, their analysis tools, and their methods. Usually, both manual and automated tests are carried out.
4. Create a first draft of the report with errors found and provide it to the project team for feedback and follow-up fixes.
5. Publish the final report, considering any action taken by the team to address raised issues.
Why do we need smart contract audits?
Gas efficiency
Smart contract audits don’t focus only on blockchain security. They also look at efficiency and optimization. Some contracts make a complicated series of transactions to complete their intended function. With gas fees on networks like Ethereum being relatively costly, efficient contracts can save a lot on transaction costs.
Optimizing their performance is also an indicator of the developer’s skill. Inefficient steps provide more points for failure and should be avoided. When gas costs are high, smart contracts may fail to execute, even more so when a low gas limit is used.
Contract vulnerabilities
Most of the work in audits involves checking contracts for security vulnerabilities. While some issues can be easy to see, many exploits involve advanced techniques and strategies to drain funds. For example, market manipulation can be used with weak smart contracts to conduct flash loan attacks. To find these issues, auditors start the break testing process and simulate malicious attacks on the smart contract. Common vulnerabilities include:
1. Reentrancy issues: When a smart contract makes an external call to another external contract before any effects are resolved. The external contract can then recursively call the original smart contract and interact with it in ways it shouldn’t be able to, as the original contract’s balance hasn’t yet been updated.
2. Integer overflows and underflows: When a smart contract carries out an arithmetic operation, but the output exceeds the storage capacity (usually 18 decimal places). This can lead to incorrect amounts being calculated.
3. Front running opportunities: Badly structured code can provide forewarning of market purchases or sales. This, in turn, can allow others to use the information and trade on it for their own benefit.
Platform security flaws
Most smart contract audits include looking at the network hosting the contracts and even the API used to interact with the DApp. A project may be vulnerable to a DDoS attack or have its website UI compromised, meaning users will actually connect their wallets to malicious blockchain applications.
