Top 6 Challenges with DeFi Smart Contract Auditing

Today, trust is one of the most important challenges in technology. With increasing cyberattacks and scandals, the importance of trust has grown exponentially in the last few years. In the blockchain world, we see this topic play out daily.

In general, we can say that it's a bit of a double-edged sword. On the one hand, blockchains can provide trust as its fundamental principle by creating an immutable ledger where no single party can tamper with or change data without consensus from other parties in the network.

In this article, we'll dive into what makes Defi smart contract auditing so challenging and how you can tackle these challenges to make your audit process more efficient and effective.

What is Defi Smart Contract Auditing?

Auditing is a crucial step in the development of any product. It's a process that verifies the accuracy, reliability, and integrity of an organization's data and operations. If you're developing a decentralized application (DApp), you'll need to perform an audit of your smart contract code before you can implement it.

Defi auditing assures that there aren't any malicious or erroneous codes in your smart contract that can cause bugs or unexpected behavior. You can also think of auditing as a Defi safety inspection. You're checking to see if the program has any coding errors that could risk the money or data in the system.

Auditing is extensive and complicated, especially regarding smart contract code. The audit process requires you to review the code, analyze it, and identify security issues. You'll also need to verify that the code complies with any regulations or standards that may apply to your project.

Top 6 Challenges in Auditing DeFi Smart Contract Audit:

1. Determine the contours of the audit

The first step in the audit process is to understand your project objectives. In addition to code review, a DeFi smart contract audit will include a review of the business model and token economics for the project.

While code review is a technical process, the business model review will involve the use of analytical tools as well as discussion with all stakeholders to understand various aspects of the business model. Suppose a project has a token economics model.

In that case, a few areas of concern will be reviewed in the audit process, such as token distribution, model of token flow, token issuance, token pricing, and token purchasing.

Duration of audit

The duration of the audit will depend on the smart contract code's complexity and the code review's extent. For instance, if the team follows standard coding practices and their project is not very complex, the audit process can be completed within a few days or a week.

Sometimes, if the project is very complex, it can take up to 3 or 4 weeks. In extreme cases, it may take up to 8 weeks or more. Audit duration can also be affected if changes in the code need to be done for the audit process or if new features are being added to the smart contract code.

In this case, the audit process can be extended a few more weeks to accommodate the extra time needed for the auditing team to analyze the new code.

3. Technical challenges

Auditing a DeFi smart contract code is a technically challenging process. Many developers don't realize this and may have unrealistic expectations about the audit process. It's important to know that a DeFi smart contract audit is not a simple process.

It's not as simple as someone reviewing a few lines of code and writing a report saying the code is safe. Auditing is very complex; it requires technical expertise, analytical skills, and extensive industry knowledge.

For instance, auditors need to understand how different parts of the smart contract code are connected. They also need to understand how different actions performed by the user can impact the entire system, including other stakeholders.

An audit report is a document describing the audit's process and results. It details any potential Defi security audit issues or challenges with the code and provides recommendations to address any issues found in the code.

4. Incomplete documentation

Documentation is a crucial part of any project. It provides a clear understanding of all aspects of the project, from the business model to the technical implementation. While coding, a developer writes the code in a particular way so that it can be easily understood by a reader who is not a programmer.

In reality, however, not all developers write their code, keeping in mind that someone other than themselves may read their code. While auditing a DeFi smart contract code, auditors will need to go through the documentation written by the development team.

This documentation can include the requirements, code flow, and detailed analysis of the smart contract code. Do keep in mind, however, that not all project teams are consistent with documenting their work.

If a team is not documenting their work, an auditor will have to pick up the pieces and try to understand the structure and flow of the smart contract code. Sometimes it's impossible for an auditor to completely understand what a developer thought when writing a particular piece of code.

5. Presentation of Audit Report

The audit report is a document describing the audit's analysis, process, and results. It's important to understand that not all audit reports are created equal. Many factors can influence the quality of the report.

For instance, the auditing team's experience, level of knowledge, and the tools they use will determine the level of quality of the report. The audit report is a substantial document that will highlight any issues or concerns with the code.

It will also provide recommendations to fix those issues or concerns. The report may contain a high-level business model and token economics overview. An audit report is a very important document for any project team. It provides an opportunity to review and correct any issues before the smart contract code goes live.

6. Finding a reliable auditing company

As we've discussed in this article, Defi smart contract auditing is a very challenging process. Whenever you're looking for an auditing company to review your code, you'll want to ensure that the company has the required expertise and experience to conduct a thorough audit of your code.

While the price of an audit may vary from project to project, ensure you're getting the best value for your money.

In general, you can assess the quality of an auditing company by looking at their past projects, team composition, and level of expertise. The best way to find a reliable auditing company is to ask for recommendations from other blockchain companies that have gone through the auditing process.

Conclusion

Defi smart contract auditing is a crucial part of the development process. It ensures that the code has no bugs or vulnerabilities that could cause the system to malfunction.

If you're planning to launch a decentralized application, it's important to perform a thorough audit of the smart contract code before you can release the product to the general public.

Auditing can be a challenging process, especially when it comes to DeFi smart contract code. This article discusses the top 6 challenges with auditing DeFi smart contract code.

These include determining the audit's contours, duration, technical challenges, incomplete documentation, presentation of the audit report, and finding a reliable auditing company.