Blockchain technology is striding greatly in bringing decentralization to execute operations in different fields. What makes the blockchain functional?
It is the smart contracts that allow the decentralized applications to interact with the blockchain and accomplish the specified task. But as smart contracts are a predefined set of codes, there tend to be certain flaws that are left unnoticed.
These errors lead to security vulnerabilities favoring attackers to exploit them and steal funds. This is where smart contract auditing services gain the upper hand in identifying the weak spots of the code beforehand, offering protection from potential threats.
So, what is smart contract auditing, and how does it secure projects from attacks? Find out an outline of a lot more related details here in the blog.
What Is Smart Contract Auditing?
Smart contracts are coded with every set of instructions it needs to perform without the involvement of any parties. This signifies the need for flawless coding to ensure smooth operations.
A smart contract audit makes sure every intended action is performed without any glitch and seals off the loopholes in the code to block the hackers from messing up with the code. In short, a smart contract audit is done to identify vulnerabilities and ensure the ideal performance of the contracts.
Different Types Of Self-Executing Smart Contracts
It comprises various categories of contracts with a purpose to serve and the need to be secure.
- Smart legal contracts: They are legally enforceable contracts that require both the parties to meet the specified criteria, failing which would lead to a legal call.Â
- Decentralized autonomous organisation: DAO has the governance rules of the organisation coded in smart contracts. The programming of DAO is such that it takes into account the decision of its community members.Â
- Application logic contracts: It is an application-based code that works in sync with the blockchain. For instance, coding to establish communication between IoT and blockchain.
What Are The Common Checks Performed While Auditing Smart Contracts?
- Reentrancy issue: Calling external contracts can sometimes result in the takeover of the smart contract control leading to data changes. This gives way to other major bugs causing a threat to its security.Â
- Unauthorized self-destruct: It is the destruction of the contract by any arbitrary address.
- Overflows and underflows: The overflow and underflow errors cause the program to revert or recalibrate to the start value, which is checked during auditing.
- Incorrect token amount calculation: The contracts are programmed to do a lot of operations dealing with a huge amount of token money. Chances are errors occur in decimal handling, percentage or fee calculation, etc.
Stepwise Workflow Of Smart Contract Auditing
Here’s a general overview of the step-by-step auditing process of smart contracts.
- Project data collection: In this step, the audit companies gather every detail of the project and understand the purpose it aims to serve. It holds greater significance in ensuring the successful completion of the audit.
- Manual review by experts: The auditors check whether the smart contract behaves in an expected way, fulfilling the requirements. Common security vulnerabilities such as the ones mentioned above, like Reentrancy, DOS, randomness, and front running, are verified in this stage.
- Manual testing: The functioning of smart contracts is observed by deploying them locally. Everything from gas consumption to coded instructions is practically tested here.
- Functional testing:Â Smart contracts are deployed in multiple environments to check the flow of operations is as intended. Gas limit functions are corrected during this phase of testing.
- Automated tool testing: Automated tools like Mythril, Oyente, Manticore, Solgraph, etc., are used to capture the errors that are unnoticed in the previous stages.Â
- Initial audit report: The report covers the wide range of vulnerabilities spotted during testing and is presented to the developer team.
- Bug fixes: The identified bugs are fixed by the project development team, and then again, it is processed for auditing.
- Final audit report: The verified functions are again checked, and the final audit completion announcement is made across social media channels.
Facts About Smart Contract Auditing
- Smart contract audits protect from security vulnerabilities and, in turn, benefits organisation
- The timeline of the audits depends on the complexity involved in the project
- Three basic steps of auditing are: Data collection, Testing, Reporting
- Testing involves the manual and automated method
- Secure smart contracts ensure the success of the team and organisation
- Proper auditing by experts saves the loss of millions
Final Take
Entrust reliable smart contract audit companies to review the code, shielding them against unseen vulnerabilities lying in the code. It is one of the best practices to follow if you desire the absolute success of your project and the safety of funds.
