Do you require a smart contract development company to audit digital agreements or need a smart contract audit checklist to ensure their flawless functioning? Here you go, then.
Regardless of what software you produce, it will foresee a weak point- a bug or an error that causes a hindrance in performance, security, or operations.
The same goes for the blockchain and its smart contracts. Yes, you read it right, they are not the safest options for your solution.
And it might be because the developing company didn’t adapt to the standardized smart contract development process or rushed to meet the pace of customer requirements.
Some reports say about 5% of the smart contracts were vulnerable to information loss, data leakage, and funding lock. Even Ethereum, a major player in the blockchain and cryptocurrency industries, admitted that over 32,000 smart contracts were vulnerable to cyber-attacks.
Thus, the security of smart contracts is not something to be overlooked.
However, in any case, it’s fixable by using tricks from the checklist and relying on a smart contract development company for an audit. And that’s what we will be focusing on in this article, the checklist as well as the methods to make your smart contract impossible to break.
Blockchain and Smart Contracts
Blockchain is a compound word derived from the fact that data (transactions) are stored in blocks of data that are sequentially connected to the last block in a line (also known as a distributed ledger), unlike a chain.
The purpose here is to document data on blocks in a line for recording all transactions across multiple computers.
Blockchain is immutable; once deployed solutions are on it, they cannot be rolled back, and its decentralized characteristics prevent any central authority (such as banks or financial institutions) from altering its operations.
Many consider blockchain to be the most secure technology. however, it’s not. And to know why let’s move ahead to its key element of vulnerability.
A smart contract is a digital contract written in codes (mostly similar to if-else conditions) that executes tasks automatically if the conditions written in the codes are met.
This could be a supply chain smart contract that verifies the package details and proceeds with the crypto transactions if the consumer has the required funds. Here, the conditions of the contract have two elements: one is the package with details, and the other is the funds.
Also Read: The Ultimate Smart Contract Developer Roadmap
However, the transaction will be revoked if the terms of the conditions fail to meet.
Smart contract functions on top of blockchain for pseudo-anonymous operations and they have been adopted by a multitude of industries including healthcare, supply chain, finance, insurance, etc. for automated task execution.
What is Smart Contract Auditing
Smart contract auditing is a process to assess the contract and blockchain’s performance, security, errors, bugs, and extra capabilities to ensure they’re well-built and ready with the necessary performance optimization for efficient trading.
Smart contract auditors are the elites who take a stance on auditing these contracts and suggest necessary alterations, processes, standards, and reports to make these agreements agile and performative.
When Does a Project Require Smart Contract Auditing
- When preparing for product release
- Upon noticing any issues or malicious activities
- After pushing a major update to contracts
- Before important listing
The Importance of Smart Contract Audit
Every piece of software or program contains some sort of bug or error, all thanks to human mistakes. The program may contain thousands of lines of code that may be affected by a single variable or condition.
Hence, even if the updates ensure the proper functioning of the software, they change each area of code, which creates new bugs. This means the bugs will always be there in a program; it’s just that the developer has to ensure the damage from those bugs is as minimal as possible.
Similar things happen to smart contracts. Just like software, they have lines of code and bugs as well.
But unlike traditional software, they operate over the blockchain, a decentralized network that is immutable. Blockchain was created to transact digital assets and coins worth millions.
In a matter of seconds, millions will be wiped out if something goes wrong.
And it’s not just the cryptos worth millions; NFTs, other digital assets, and real-world assets like houses or land will also be at risk.
Decentralized finance (DeFi) is among these emerging technologies that will inevitably take on the world of finances. It’s the next revolution in finances, which will be used to trade billions. So no one can risk losing billions just because of an automated code with conditions.
Hence, to protect these automated agreements from cybercrime and save every single penny, smart contracts should be audited by professional contract auditors.
The Reason Why Smart Contracts Are Vulnerable
Blockchain follows its development process with its own programming language, framework, IDE, and tools to ensure all practices produce a quality and risk-free blockchain solution.
And a lot of concepts go into building a sustainable blockchain solution, including, cryptography, end-to-end encryption, cryptonomics, web development, etc., which makes it a wholly unique concept from traditional software.
Smart contracts, on the other hand, are nothing but codes. And in software development terminology, if something is written in code, it’s considered a program/software.
So the result is a traditional program (a smart contract) operating over a cutting-edge platform (blockchain).
Since it is a program, its natural human mistakes will introduce uncertainties, i.e., bugs, into a smart contract, making it vulnerable to cybercrime.
Here are some other reasons that cause smart contracts to become vulnerable,
- Tracking the current security status of smart contracts is nearly impossible on the blockchain.
- Smart contracts and their extra capabilities cause complexity and bugs.
- Blockchain and smart contracts are the key media for transacting funds.
- Blockchain is immutable, once the smart contract with any bugs is deployed it can’t be reverted or configured.
- Transactions cannot be reverted performed by any faulty smart contract.
Most Common Vulnerabilities in Smart Contracts
Here are some of the most common vulnerabilities in a smart contract that every organization should take into consideration.
- Arithmetic errors of integers
- Frontrunning
- Reentrancy
- Interface or naming issues
- Time component
- Incorrect exception handling
- Incorrect ERC-20 token work function
- Logic bugs
The Ultimate Checklist for Smart Contract Auditing
The checklist for smart contract auditing keeps changing as attackers employ different techniques to steal funds or data.
Nevertheless, the checklist ensures that present-day threats are kept out while introducing techniques to make your smart contract unbreakable.
1. Prerequisites First
Before you move ahead with anything, it’s always good to have a plan or approach to assessing areas of the smart contract. This practice will save a ton of time and effort, allowing auditors to only focus on particular areas of alterations.
To put it simply, the entire audit depends upon this very step.
Firstly, auditors will check each party in the agreement, the terms of the contract, its functioning, scope, parameters, acceptance criteria, and exceptions.
Then, they will need the technical documentation of the contract to get more insights into the blockchain used, its characteristics, the tools used, the patterns used, and other critical things about the process opted to develop and test the smart contract.
2. Core Checks
Now that they know everything, smart contract auditors move ahead with the planning, and to do so, they perform a few core checks.
The following are the most favorable areas that cybercriminals target.
- Overflow and underflow preventions
- Function visibility
- Time manipulation within a few minutes only
- Utilizing reliable and audited dependencies
- Fix warnings to avoid tricky features
- Checking external calls, such as reentrancy or short circuits and others
- Validate external or public functions
- Checking rounding errors and unexpected behaviors
- Unbounded loops preventions
- Push payments and their correct usage
- Using the latest solidity versions performing change verification
- Lowering down pseudo-randomness
- Old solidity constructs and their frequent updates
3. Automated, Manual Testing and Engineering
After knowing which areas to check, smart contract auditors can build test cases for each area.
Here, the testing is performed in two ways, both manually and with automated smart contract audit tools.
Both practices are beneficial, but manual testing is something that is preferred more, as automated testing tends to overlook some critical errors and security issues.
Though automated testing isn’t reliable, it can figure out some minor errors and get them fixed.
Parameters to check:
- Unit testing to cover edge cases
- Test coverage for 100% of all the branches
- Test cases for integration
- Freezing recent codes written in rush to meet a tight deadline
4. Resiliency
The ability of blockchain to adapt to various chaotic conditions is known as resiliency.
Resilience helps blockchain sustain a huge number of data and users on the platform, which is why it becomes a key element for attackers to take advantage of.
The smart contract auditors test the endurance, capacity, load, and compliance to ensure the blockchain performs smooth operations and, if any deadlocks occur, recovers as quickly as possible.
5. Smart Contract Auditing
The auditing steps may not always be the same, as they vary depending on the size of the project, its scope, complexity, and contract terms. Moreover, the steps may also vary depending on the industry the contract serves.
Smart contract auditors should always remember that auditing is about more than just the codes; it is also about generating reports and researching different parameters to come up with solutions and introduce new practices to make smart contracts more agile.
The generated report should always contain bug reports, performance overviews, security concerns if any, notable parameters, and points on how to improve the security, and performance of the blockchain and smart contracts while keeping them bug-free.
Above all, there are crucial parameters that a smart contract auditing company should possess. In addition to these steps and points, a smart contract auditor should employ other parameters to keep the decentralized solution safe.
How To Employ The Best Practices of Smart Contract Auditing
There is no doubt that the above checklist is more than sufficient to keep your blockchain and smart contracts secure.
However, as cybercriminals use multiple techniques to access funds or data, the checklist might need updating from time to time.
Another thing to consider is the project variations. The checklist might need some additional steps based on the complexity of your smart contract and blockchain, its scope, and other parameters.
In this scenario, you might want to join hands with capable smart contract auditing services or a group of professional smart contract auditors who stay up to date with the latest trends and employ agile auditing practices to keep your solution secure.
Interested? Here is the deal for you.
Also Read: Step-by-Step Guide For Successful Smart Contract Development
Whether you want to develop or audit a smart contract by hiring smart contract auditors or joining hands with a firm, SoluLab is your go-to option. SoluLab assists you in combating security issues and vulnerabilities in your solution at an affordable price without sacrificing quality.
From the infancy of smart contracts and blockchain, SoluLab has been providing smart contract services to a wide range of industries. As a result, our staff is very knowledgeable about its roots and how to optimize them to bring you the greatest profits.
So why wait? Get in touch with us today and make your smart contract unbreakable.
Final Words
There you have it. An ultimate smart contract audit checklist to help you understand the critical areas of smart contract auditing.
Remember that, the above checklist covers almost every other area to assess contracts, but it may require some additional steps if a project is much more complex and holds extra capabilities for some unique operations.
Another point to consider is the trends of cyberattacks. As cybercriminals use different techniques to target different areas, it’s almost impossible to predict what needs to be added. In such scenarios, the checklist might get updated from time to time.
This leads us to the conclusion that it is always best to rely on a smart contract development company that can take a stance on auditing critical parameters and improving your solution to avoid losing millions of assets and a large number of users.
You can always reach out to smart contract services like SoluLab to gear up your solution.
FAQs
1. Who Needs A Smart Contract Auditing?
Third-party auditing should be considered by anyone who uses decentralized solutions such as ICOs, web3 games, STOs, DeFis, and Dapps based on smart contracts.
2. How Long Does a Smart Contract Audit Take?
Depending upon the size of your project, its complexity, scope, extra capabilities, and a number of issues in a smart contract, it could take a few days (for standard tokens ERC 20 and others) to almost two to three weeks or a month (for DeFi, Dapps, crypto wallets).
3. How Much Does A Smart Contract Audit Cost?
In general, smart contract auditing companies charge from $1,000 to more than $15,000 depending on the type of smart contract, size, complexity, and audit type (manual or automated).
However, if you outsource your auditing to a smart auditing company like SoluLab, then you might get affordable services without any quality compromises.
4. Can I Perform Smart Contract Auditing By Myself?
Yes, if you possess auditing expertise, you can perform smart contract audits using automated tools. However, we highly suggest hiring professionals who follow present-day trends and cutting-edge practices to safeguard your solution.
5. Why SoluLab for Smart Contract Auditing?
SoluLab is the ideal destination for all kinds of decentralized development, whether you require blockchain, metaverse, web3 games, DAO, Dapps, or smart contracts. SoluLab has been in the game for a long time. As a result, the experts at Solulab know everything about the decentralized solution and its ecosystem.
In terms of smart contract auditing, we have served a multitude of industries with auditing, threat modeling, DeFi projects, automated security analysis, and security incident planning to safeguard their solutions.
