A Guide to Smart Contract Security Audit

Smart contracts have proven to be a beneficial aspect of blockchain technology where its implementation applies to almost every industry from finance to supply chain to music to IoT, and a lot more.

Smart contracts offer a variety of applications and transaction use cases, promising enhanced security and transparency within business operations. But when we talk about security, many aspects pose a threat to the security posture of an infrastructure which sometimes becomes invisible to recognize.

Likewise, security weaknesses in an organization’s smart contracts can be exploited by cybercriminals to cause hefty revenue and data losses to businesses.

The manual approach renders many advantages. A good-sized development team conducting manual code analysis is one of the best ways to identify loopholes and coding errors.

And to prevent such circumstances to prevail, it is significant to learn about how smart contract security functions and audits ensure the protection of smart contract-based platforms from hacking attempts and web attacks.

What Is A Smart Contract Security Audit?

A smart contract security audit provides a detailed analysis of a project’s smart contract to ensure the safety of funds invested through them. The audit focuses on the scrutiny of the code used for underwriting the terms and conditions in smart contracts.

This ultimately helps developers to detect the areas prone to vulnerabilities and flaws before smart contracts are finally deployed. Bad codes written for smart contracts can let the parties involved in smart contracts witness unbearable financial losses by allowing malicious web actors to take advantage of the loopholes left unattended.

Smart contract audits facilitate a thorough review of the code as once it’s finalized in the blockchain it is impossible to change it or reverse transactions in that contract. They help boost the performance of the contract and alleviate risks to personal data and funds.

How Do Smart Contract Security Audits Contribute?

Security of data is one of the major and primary concerns of every business as it’s directly linked to controlling its financial and reputational index. Additionally, implementing smart contracts within a project, security again plays a crucial role and is a formidable concern in the implementation of smart contracts.

Companies in the present times are highly pressurized to deliver tightened smart contract security while developing, considering their irreversible nature. Moreover, a single error code within a contract can make them vulnerable to exploits, thus, raising the risks of losing the contract as well as the associated assets and funds.

This presses on the need and significance of smart contract audits that help in:

• Enhanced wallet security
• Better code optimization
• Improved performance of smart contracts
• High security against hacks and attacks

Auditing smart contracts can help enterprises safeguard themselves from prevalent security attacks like

• Replay attack
• Reentrancy attack
• Short address attack
• Reordering attack
• Over and underflows

How to Do a Smart Contract Security Audit?

Approaches to audit smart contracts are divided into two types of code analysis:

• Manual code analysis
• Automatic code analysis

Manual

The manual approach renders many advantages. A good-sized development team conducting manual code analysis is one of the best ways to identify loopholes and coding errors.

The manual review includes the team examining each line of code to scrutinize it for compilation, re-entrance mistakes, and security problems. People run security checks strenuously to identify issues as they pose the biggest threat to the long-term implementation of smart contracts.

Automatic

Code analysis, done automatically, executes sophisticated penetration testing where each test aims to find vulnerabilities quickly. These automatic checks render a few drawbacks to the developers like missed vulnerabilities and false code identification.

False positives can act as a nuisance and missed vulnerabilities can have dangerous impacts. Both situations, if occurring, can be troublesome for the organization as well as the parties involved in the smart contracts.

So it is recommended to conduct a thorough manual analysis of the code even after conducting the automatic assessment. Some of the tools used by developers to conduct automatic code testing include Populus and Truffle.

The results of the audit are documented in an audit report that provides insights into the results of audits which helps teams to understand the issues and vulnerabilities alongside the recommendations given by the audit team.

Does Your Organization Need a Smart Contract Audit?

If your company deals with blockchain and smart contract products/services, you certainly need to periodically conduct smart contract security audits to avoid becoming attractive targets for cybercriminals.

Being well aware of the DAO attack on Ethereum that nearly accounted for $60 Million it becomes crucial for every business dealing with blockchain and smart contracts to strengthen their security posture, leaving no areas to be exploited for misuse.

Since smart contract transactions cannot be reversed once executed, it is quintessential to ensure that the project’s code is appropriate, accurate, and secure at the same time. Sometimes the highly secure nature of technologies can make it difficult to retrieve funds and resolve issues after the fact, so it’s better to prevent vulnerabilities at all costs.

CodeGlo’s Blockchain experts understand that audits have become a gold standard to tighten the security of a business’s infrastructure and its products/services. To know how our Blockchain Development pundits can help you secure your digital assets powered by blockchain, get in touch with us anytime, and book a free consultation.