Undoubtedly, it is more evident that smart contracts are beginning to take the forefront of Blockchain technology even as the report of different hacks and heists on blockchain projects keeps surging.
These exploits on blockchain projects are scaring investors hence, bringing a drawback concerning the long-term success of blockchain technology. To restore the trust of users and investors, it is important to take note of how secure the smart contract security audit is which will help aid mass adoption.
Notwithstanding, DeFi stands as a major platform that utilizes smart contract audits. We will be looking at how best we can utilize a smart contract security audit to develop a better environment for both project initiators and investors as well.
What are Smart contracts, smart contract audits, and audits themselves?
A smart contract is a set of programmed agreements that are tailored to automatically execute a transaction based on a user's request on a network. Additionally, since smart contracts are responsible for managing large amounts of crypto assets and funds, exposing the contract to a single bug can result in losing all the assets invested by users and stakeholders on a platform.
A smart contract security audit on the other hand represents a detailed analysis of a project's smart contracts as they are responsible for the safekeeping of funds invested. If any transaction should go wrong on the blockchain, it becomes impossible to revert.
The audit process for a smart contract is the scrutiny of the code which is used for underwriting the terms and conditions in the smart contract.
Audits make it easier for smart contract developers to readily find bugs and vulnerabilities on a platform, before deploying the smart contracts.
What auditors do is to carefully test the proficiency of the code of smart contracts, and as a result, produce a report, then, work on the security issues confronting the effective performance of a project.
What are the different types of Smart Contracts?
These are the types of smart contracts, based on their usage by programmers for building applications.
Smart Legal Contracts
These are legally binding contracts used whereby traditional contracts are digitally automated to enable users to guarantee an immediate outcome with minimal human effort. Different sectors are indeed taking advantage of this automation process.
A practical example is the DeFi industry which has been developed to disrupt the traditional banking economy and bring about a change by eliminating intermediaries.
Decentralized Autonomous Organizations (DAOs)
They are like a digital-native business, collectively owned and managed by their members. No single entity has the authority to access it without the approval of the group. The Decision-making process is done through proposals and voting to ensure every member in the organization has a voice that is not influenced by external entities.
Contracts of Applied Logics (ALCs) –
These contracts are built-on application-specific codes combined with other programs on the blockchain. They are developed to validate communications. They function under a managing program and are essential for multi-function smart contracts.
How do smart contract audits work?
They work based on the overall nature of the project hence, helps in determining the analysis tool and method to adopt. This will help aid auditors to gain a better understanding of the project before they start writing the code. As stated above, for a smart contract audit to work efficiently, a proficiency test needs to be carried out for the code of smart contracts. This will help with the production of reports, before working on the security issues confronting the effective performance of a project.
Attacks smart contracts audits can be exposed to
Despite the securities that are deployed in smart contracts, they are sometimes exposed to some sort of attacks and vulnerabilities. Let's take a look at some of them
Reentrancy
It happens when a function makes an external call to another untrusted contract. This is considered one of the most destructive attacks in the Solidity smart contract which is capable of draining the funds in a project.
If the contract is not updated before sending funds, it becomes easy for hackers to constantly call the withdrawal function hence, withdrawing all the funds in a contract. A good example of a reentrancy attack is the DAO attack that resulted in the loss of $60M.
Other reentrancy attacks Include the BurgerSwap hack (May 2021) – $7.2 million, SURGEBNB hack (August 2021) – $4 million, CREAM FINANCE hack (August 2021) – $18.8 million and Siren protocol AMM pools hack (September 2021) – $3.5 million.
Timestamp manipulation attack
This occurs when a miner changes the timestamp of a block to their advantage. To avoid this type of attack, it is advisable not to follow the 15-second rule or not to use a block.timestamp in your contract.
Byte array attack
Byte arrays are relatively slow and can be easily used to harm a smart contract using a distributed denial-of-service (DDoS) by bugging it with a large number of requests.
Practical steps to secure smart contracts against attacks and vulnerabilities:
A secure smart contract code should be written using the best practices of reputable organizations
Always have a blockchain security checklist
Carry out an automated security scan for your smart contracts
Ensure to do a penetration testing and smart contract security audit
Always use the best blockchain tools required for auditing, security, and design.
Where to get a smart contract security audit:
BlockSec smart contract security audit firm
BlockSec is a smart contract security auditing firm which we at Teleport network utilizes. They are focused on the security of the blockchain ecosystem and they also collaborate with other leading DeFi projects with the aim of securing their products. Due to the quality of their services, it has provided several blockchain projects with security papers in prestigious conferences, reported several zero-day attacks of DeFi applications and have released detailed analysis reports of high-impact security incidents.
They provided teleport network smart contract security audit on the following: interfaces for accounts in Teleport Chain, interfaces for the Teleport project, software security, DeFi security and NFT security
Check out our audit report here and in the future, we may have more audit firms do our smart contract audit.
Concluding thoughts
With all that has been said, it is very important that before a smart contract is deployed into a project, it is crucial to ensure that the smart contract has passed through a smart contract security auditing company. This will help you not to expose your projects to bugs and vulnerabilities hence, limit the number of blockchain projects from being exploited by hackers.
