Security audit of smart contracts

Smart contracts are adaptable tools that can track the movement of tangible and intellectual property, as well as facilitate and verify financial transactions. Because smart contracts have the power to allocate valuable resources across complex systems and are for the most part autonomous, security and consistency are critical.

Therefore, understanding the likelihood and critical nature of possible flaws or detected errors is essential to smart contract security

Smart contract security audits scrutinize a project’s smart contracts and are necessary to protect the assets invested in them. If funds are withdrawn, they cannot be recovered because all blockchain transactions are irreversible.

The security audit method for smart contracts focuses on inspecting the code underlying the smart contract terms so that developers can quickly identify vulnerabilities and flaws before deploying smart contracts with the advice they receive.

Currently, one of the most pressing concerns in smart contract deployments is security. Concerns about inefficiency, security and unscrupulous behavior are well founded, so ignoring them when using the blockchain network to create smart contracts can lead to extremely high additional costs.

In addition, even minor bugs in the code can lead to large amounts of money being stolen. For example, a vulnerability in Ethereum’s DAO led to the theft of about $60 million in ETH and, consequently, the hard-forking of the entire network.

Not surprisingly, blockchain companies are concerned about the deployment of smart contracts because of their irreversible nature.

In addition, due to security flaws, there is a risk of losing the entire contract and related assets. Thus, auditing smart contracts is a critical requirement for the following reasons:

• Avoiding costly errors. Auditing code early in the development lifecycle can help avoid potentially fatal errors after launch.
• Expert auditing. Experienced auditors test code in a variety of ways to rule out bugs.
• Enhanced security. Smart contract security audits ensure that owners of decentralized products keep their code safe.
• Analytical Reports. You receive a report that identifies vulnerabilities and recommends corrective action.

The audit team checks for known vulnerabilities applicable to the specific business logic of each smart contract. It also assesses whether the code conforms to the official Solidity code-writing guidelines and verifies that the smart contract is free of logic and access control issues. The procedure and method for auditing the security of smart contracts can vary on a case-by-case basis.

Smart contracts can be audited using manual or automated approaches, as follows:

• Manual auditing

Manual auditing involves a team of auditors reviewing each line of code for compilation and re-entry issues.

It can also help in detecting other security vulnerabilities that are often overlooked, such as inefficient coding methods. Because this method detects hidden flaws, it is considered the most accurate and complete.

• Automated auditing

An automated approach to auditing smart contracts uses error detection software that helps auditors identify the exact location responsible for errors. Projects that require fast time to market often prefer the automated approach because it helps find vulnerabilities much faster. However, automated software may not always understand the context and may miss some vulnerabilities when auditing.

Smart contracts are audited using a standard procedure and may vary slightly from one audit firm to another. The following is a typical procedure:

• Data collection

To ensure the integration of third-party smart contracts is assured, auditors collect code specifications and examine the architecture. This helps the auditors understand the goals of the project and determine its scope.

• Running tests

Auditors test the project to verify each smart-contract feature. Auditors use a variety of tools (both manual and automated) to ensure that tests verify all of the smartcontract code.

• Choice of audit method

Because manual auditing is more efficient, auditors often audit smart contracts without the help of software. This approach can effectively detect vulnerabilities such as preemptive attacks.

• Generating an initial report

After the audit is completed, an initial report is made so that the project team can fix the bugs and vulnerabilities found. Some smart contract service providers have a team of experts to help fix every bug that is found.

• Generation of the final audit report

After the bugs are fixed, a final report is published, taking into account any actions taken by the team.

AVADA-MEDIA audits smart contracts on an ongoing basis. Our streamlined suite of blockchain security analysis tools, combined with the hands-on experience of our auditors, ensures that your blockchain application is 100% launch-ready and meets the highest security standards. Auditing your code early in the development lifecycle prevents potentially catastrophic vulnerabilities after launch.