Smart Contract Security Audit: A Complete Guide

Malik Ahsan


Smart Contract Security Audit: A Complete Guide. Smart contracts are versatile tools to facilitate and validate monetary transactions and track the movement of physical objects and intellectual property. Security and consistency are of the utmost importance for intelligent contracts due to their autonomy and the fact that they can distribute valuable resources between complex systems. Consequently, intelligent contract security necessitates knowing the probability and seriousness of potential contract defects or found mistakes. To safeguard investment funds held in smart contracts, conducting a thorough audit of the project’s smart contracts is essential.

Blockchain transactions are irreversible. Therefore, the stolen money is lost forever. Developers can quickly uncover intelligent contract vulnerabilities and flaws by auditing the code that supports the contract terms. This strategy lowers deployment risk. This post covers the most prevalent clever contract vulnerabilities and audit questions, including how they function, their importance, and how to get into the field.

Why is the Smart Contract Security Audit Important?

Currently, security is a significant concern when it comes to using smart contracts. Using a blockchain network to build intelligent contracts raises concerns about inefficiency, security, and misconduct, as disregarding them could lead to substantial extra expenses. In addition, vast sums of money can be stolen due to tiny programming errors. For instance, a hard fork in the Ethereum network was caused by the DAO incident, which stole about $60 million worth of Ether (ETH $2,229).

Businesses are understandably wary about deploying intelligent contracts because of their irreversible nature. Additionally, you risk losing the whole contract and its associated assets because of security holes in smart contracts. Smart Contract Security Audit:  For these reasons and more, auditing intelligent contracts has grown in importance in recent years:

  • Avoid costly errors:  You can prevent launch-day bugs that could be disastrous by auditing your code early on in the development lifecycle.

  • Expert review: To ensure your code does not produce any unexpected effects, seasoned security auditors will review it twice.

  • Prevent security attacks:  Maintaining vigilance for security vulnerabilities while you write and modify code helps protect against security threats.

  • Enhanced security:  Owners of decentralized products can rest easy knowing their code is secure thanks to smart contract security audits.

  • Continuous security assessment: You may enhance your development environment by doing continual security checks using the innovative contract auditing procedure.

  • Analytical reports: Get a vulnerability report that includes a high-level overview, information on the issue, and suggestions for how to fix it.

How to Conduct a Smart Contract Audit?

How to Conduct a Smart Contract Audit?

An auditing service for intelligent contracts verifies their business logic against a list of known vulnerabilities. In addition, it checks if the intelligent contract follows the Solidity Code Style Guide and if there are no logic or access control issues. Innovative contract security audit standards are project-specific. Methods for auditing intelligent contracts can be automated or conducted manually, as will be covered further.

Manual auditing

In a manual audit, a team of specialists checks each line of code for issues with compilation and re-entry. Poor encryption procedures are one example of how this might help find hidden security flaws. Instead of focusing solely on code problems, this approach finds secret faults, such as design challenges, making it the most thorough and accurate way.

Automated auditing

Contrarily, automated intelligent contract auditing uses flaw detection software to assist auditors in pinpointing the precise area accountable for mistakes. Projects with a tight deadline typically choose an automated method due to the significant time savings it provides in finding vulnerabilities. Smart Contract Security Audit: While automated software does an excellent job examining code for vulnerabilities, it doesn’t always grasp the context.

Procedure for Auditing a Smart Contract

Although competent contract auditors may vary greatly, they all adhere to a pretty basic method when auditing intelligent contracts. Here is a common approach:

Collecting models of code design

Auditors compile the code specs and analyze the architecture to guarantee the inclusion of third-party intelligent contracts. Insight into the project’s objectives and scope can be gained by auditors in this way.

Run unit tests

The next step is for auditors to create test cases exposing each intelligent contract function. Audit specialists utilize automated and human technologies to ensure the smart contract’s overall code is included in the unit test cases.

Select auditing approach

Auditors frequently examine intelligent contracts without software assistance since manual auditing is more efficient than automated auditing. Attacks such as front-running can be effectively detected using this method.

Draft the initial report.

Following the completion of an audit, auditors document any issues in the code that were found and offer suggestions to the project team on how to address them. Several intelligent contracts service companies employ teams of specialists to address any issues that may arise.

Publish the final audit report.

After all issues have been addressed, the auditors will release the final report, reflecting the steps taken by the project team or outside specialists to address the concerns raised.

Critical Vulnerabilities in Smart Contracts

Vulnerabilities in Smart Contracts

The following paragraphs explain the most common security flaws that can be found in smart contracts:

Timestamp dependency

The execution environment of the intelligent contract is skewed in favour of the miner, in contrast to conventional programs. A miner can achieve a goal by manipulating the current time to impact the execution result of a contract whose logic is based on the present time.

Function visibility errors

The public visibility property of a Solidity function is the default. Therefore, if a developer fails to specify the visibility of a private function, anyone can access it. For instance, anyone can use the Destruct function to terminate the contract abruptly.

Reentrancy attacks

A reentrancy attack is among the most dangerous threats to a Solidity smart contract. Reentrancy problems may arise if a developer doesn’t care. A reentrancy attack occurs when a function calls another untrusted contract externally. The dishonest agreement then tries to drain cash by repeatedly recursively calling the original function.

Random number vulnerability

If a contract uses a publicly known variable as its seed, an attacker can predict the generated random number with high probability.

Failure to differentiate humans and contracts

Possible unanticipated consequences may arise from failing to determine if the brilliant contract caller is an individual or a contract. Take the popular 3D game Fomo3d as an example. A hacker can make money through the airdrop function if they guess the block correctly, which means they must forecast the contract date.

Spelling mistakes

Initializing contracts and identifying their owners often include constructors. The compiler would not know if the function was misspelled when coding; therefore, it would remain public and accessible to everybody. One uses a function to set a contract’s state variables in Solidity. Invoking the function during contract construction allows for the setting of initial values. The public and the private sectors both employ builders. Additionally, byte code and other artifacts needed for smart contract deployment are generated during the compilation of the Solidity code using a Solidity compiler.

What is the Cost of a Smart Contract Audit?

What is the Cost of a Smart Contract Audit?

Although the price can be substantially higher in some instances, the average range for innovative contract auditing services is $5,000 to $15,000. Consequently, the auditing firm writes a report outlining the possible vulnerabilities in the code and providing further suggestions to strengthen its security. To better understand current security trends, the experts also examine contract dynamics. Why, therefore, do audits of intelligent contracts cost so much? Due to the complexity and time required to inspect each line of code individually, intelligent contract audit services come at a premium price.

Despite the expense, auditing smart contracts is necessary to repair bugs in the code that, as indicated before, could lead to substantially higher costs and security holes. I was wondering how long it takes to audit a smart contract. The first smart contract audit can take anything from two days to a week, depending on the project’s size, the smart contract’s complexity, and the level of urgency. Large projects or protocols may require an audit that lasts up to one month. Once the initial audit is over, the client receives recommendations for improvements that they can apply. They also get to decide how long it takes to fix the errors. Following that, a remediation check is conducted, which typically lasts for one day.

How to Become a Smart Contract Auditor?

Smart Contract Security Audit: Programming expertise is required due to the line-by-line nature of auditing smart contracts. Know that your code critiques will be meaningless for a long time if you have no programming background. Solidity is the programming language used to build smart contracts on the Ethereum blockchain, and you should be familiar with its fundamentals. You can begin by studying Ethereum documentation and enrolling in blockchain technology basics classes. Applying your knowledge is the best approach to mastering any programming language or blockchain.

Keep in mind that blockchains use several computer languages. Please get to know us better by reading our guide: Overview of the most common blockchains used in NFT development, written for newcomers. With a finance background, auditing decentralized finance (DeFi) projects are more accessible. Since most DeFi projects use common financial terminology, auditors conducting smart contract audits would do well to familiarize themselves with concepts like crypto derivatives.

Smart Contract Auditing Firms

Now that we understand the significance of auditing smart contracts, let’s look at a few companies protecting the crypto ecosystem. The online and blockchain security business CertiK was the first to offer audits for the security of smart contracts. Verified by CertiK, BNB Smart Chain, Bancor, and Huobi, they are all in good standing. Additionally, the Binance accelerator fund uses CertiK to audit intelligent contracts before investing in any project.

Founded in 2017, Chainsulting is a famous smart contract auditing firm. Notable DeFi protocols that use it include 1inch and MakerDAO. Two of the most well-known names in blockchain technology, Coinbase and the Ethereum Foundation, use OpenZeppelin’s auditing services. In addition, the platform’s modular contract templates guarantee the development of secure Ethereum smart contracts.


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