AUDITSDIGITALSmart ContractsTECHNOLOGY
Smart contracts are never built to intentionally break or run incorrectly but unfortunately they are very prone to human error which means issues can, and do arise at times. These issues are what hackers are looking to exploit for any number of reasons. Smart contract audits are always recommended as a final step prior to deployment as they help to identify any potential vulnerabilities and help you address them before they can be leveraged against you.
But what exactly is a smart contract audit and what does it entail?
A smart contract audit is a very thorough inspection and analysis of the code used by a specific smart contract to execute an action or set of actions. This is also the same code that is used to interact with the blockchain it is hosted on. In short, it is the process that reputable developers and agencies use to identify any bugs, security issues, and/or technical issues before the smart contract is published. The audit is performed to ensure that the smart contract is perfect and ready for deployment. If any issues are found, then the auditors send the code back to the creator with instructions on what was found so it can be remedied.
An audit is an essential part of the process as more often than not, sections of un-audited code are copy and pasted from old projects into new ones without realizing they are just perpetuating a code issue that should have been dealt with already.
Smart Contract Attacks
Unfortunately, the increasing need for smart contract creation and the availability of qualified developers has led to a tremendous backlog of projects, and an ever increasing pressure to produce smart contracts. This has led to many developers not following security protocols that are known to leave vulnerabilities, and these are the cracks in the proverbial armor that less than savory actors are looking to exploit.
These bad actors typically rely on one of two main methods for carrying out an attack. The first relies on social engineering to discover private information such as an individual’s maiden name or pet name – both of which are typically used as part of a security questionnaire (so stop answering those stupid online surveys – you are making it easy for these people!). The second is when the perpetrator leverages the code itself to find available vulnerabilities and then exploit them.
Think of the first method as low-tech and the second method as very high-tech. It is up to the end user to keep their valuable information private but with the second method, there isn’t anything the end user can do but there IS something that the smart contract developer can do and that is to have a smart contract audit performed before deploying the smart contract to a blockchain
The Importance of an Audit
Most developers are not trying to dodge responsibility, they just know that the chances of something happening to the contract they actually wrote is fairly low when you look at the industry as a whole – but these incidents are growing rapidly. In 2021 alone, there was over $1.3 billion stolen from smart contracts and unfortunately, 2022 is on track to exceed that number. A smart contract with vulnerabilities is more than just a problem for developers and the end user, it represents flawed programming that can tarnish both the developer AND the agency they work for.
The Smart Contract Security Audit Process
A smart contract audit may be different from auditor to auditor BUT they all follow a few standard procedural steps. These steps include:
1. Define the Scope of the Audit
The scope and end use of the project needs to be outlined, along with the smart contract architecture so the audit team has a complete understanding of the project’s goals when writing and running the code.
2. Unit Testing
While running unit test cases, the audit team is watching to see if the smart contract is actually operating as intended. It is at this point in the audit that the team will use their auditing tools to ensure all relevant functions and risks are covered.
3. Manual Auditing
This is where things start to slow down as the audit team will meticulously go through every line of code, section by section, inspecting it and verifying it will do and act as intended. This is not unlike having a classmate check your answers before turning in a paper – fresh eyes really do make a difference.
4. Automated Auditing
This is where things get down and dirty, everything done to this point was done with the goal of being able to pass the code through an automated system that checks things a human would not be able to. There are many tools out there for this and some are even proprietary to certain auditors but they all function alike – to dive in deeper than a human ever could and discover any vulnerabilities that may have been missed up to this point. This is yet another reason why it is so important to check your work with a reputable auditor.
5. Initial & Final Report
Once all these steps have been completed, an initial audit will be produced outlining any issues that have been found and the code will be sent back to the developers for revision. This series of actions will repeat over and over until there are now issues found. Once zero issues are present, a final audit report will be issued and this is the report that certifies that this smart contract has been checked on this date, with these tools, testing for these known vulnerabilities (if any), and has been found to be error free.
Smart contract audits are essential to reduce the vulnerabilities typically found in smart contract development. While many larger organizations are starting to leverage blockchain technology for their various uses, more and more are being put into production on a daily basis. With this increase in activity, there is bound to be more human error involved as smart contracts are pushed out the door – and this is exactly what is needed by those who wish to exploit these vulnerabilities.
Thankfully, smart contract creation platforms help to reduce the potential for human error by automating many parts of the more tedious areas of development and creation. Even better, platforms like Viveel not only help to reduce human error with automations, but increases security through the use of pre-audited templates and code modules. This coupled with integrated partnerships with many of the world’s leading audit firms means your organization can save time, money and resources giving you the upper hand against the hackers who wish to do you and your organization harm.