Top 5 FAQs on Smart Contract Auditing

From the DAO hack to wormhole attacks and other DeFi bridge attacks, smart contract vulnerability exploitation has been a buzz among crypto enthusiasts for some time.

Blockchain technology grabbed the attention of users because of its security aspect. Though smart contracts are deployed over blockchain, they are not without risks.

A smart contract needs an auditing solution to enhance code correctness for optimized performance.

This article will discuss the five most asked questions about smart contract auditing.

Let’s Begin!

What is Smart Contract Auditing

Auditing a smart contract involves thoroughly examining the code, usually by a third party, to look for flaws and improve functionality. A smart contract auditor examines the source code to determine whether it adheres to the predefined conditions and behaves as the developer intended.

With rising hacks and crypto-heists, it has become increasingly important to put the correct code on the mainnet. Audit significantly reduces the chances of errors, providing a safe deployment of your project.

Why are Smart Contract Audits Important

Although blockchain has an immutable nature, smart contracts deployed over it are not without risks. In fact, it is due to this immutability that doesn't allow you to amend your code after deploying it on the mainnet. Hence, getting your smart contract audited is vital before making it live.

Here are a few other reasons for auditing smart contracts.

1. Enhances investors' trust in your project.
2. Provides an additional layer of security to your smart contract.
3. Optimizes code functionality.
4. Impart protection against thefts and hacks.

How do Smart Contract Audits Work

A smart contract audit thoroughly examines the code, checking for vulnerabilities and optimizing performance.

The smart contract auditing process can be divided into the following stages:

1. Information gathering

It helps to define the audit scope, expected business behavior, project's goal, and architecture. Auditors must be able to access documents such as the business requirement document, the project's whitepaper/yellow paper, the technical specification document, smart contract code via GitHub commits, and others.

2. Unit test and code analysis

At this stage, the auditor test runs the unit test cases written by the developer and scans the code line-by-line for vulnerabilities. This is called manual testing, although automated audit tools usually accompany it for speedy and thorough verification of the smart contract.

3. Reporting

The auditors conduct initial reporting after completing the first round of detailed project analysis and final reporting after completing the second round of analysis.

Following the initial report, developers make the necessary changes based on the recommendations. A final report is prepared for postcode refactoring.

Can I conduct a smart contract audit myself

Yes, you can conduct a smart contract audit.

You must be aware of common smart contract vulnerabilities, but it is still recommended that you get your code audited by dedicated security auditors.

Outsourcing the audit process to a third party provides a different dimensionality to your smart contract. External auditing imparts an unbiased view of the project and significantly reduces the chances of hacking.

What are Smart Contract Security Risks

Smart contract flaws could pose a security risk and are tempting targets for malicious cybercriminals. In fact, if there are no external exploiters, there is a risk of capital collapse and financial losses in some cases.

Here are a few vulnerabilities commonly observed in smart contracts.

1. Re-Entrancy
2. Broken access control
3. Front running
4. Floating Pragma
5. Arithmetic Over/Under Flows
6. Unexpected Ether
7. Delegate call
8. Entropy Illusion
9. Short Address/Parameter Attack
10. Unchecked CALL Return Values
11. Denial Of Service (DOS)
12. Block Timestamp Manipulation and many more.

In fact, new vulnerabilities enter the space every now and then, making it imperative to go for periodic smart contract audits.

Mapping Up

We hope we could clear most of your doubts regarding smart contract auditing solutions.

The need for smart contract auditing is becoming increasingly important as the crypto-world expands. Users' funds are at risk due to sophisticated DeFi and smart contract hacks.

Therefore, projects must ensure to conduct a thorough, smart contract audit before it's too late.