Smart Contract Audit for Secure and Accurate Smart Contracts

Posted by : Mudit Kumar | 27-Nov-2020

  • Smart Contract Audit

    Smart contract development is one of the efficient services designed to exist for a real-virtual link. It has become possible due to the development of node-based technologies. But all the good stuff comes at a price. Likewise, smart contracts come with security-related issues, which can lead to tremendous losses. Performing compliance checks on Smart Contracts can minimize the probability of such errors. 

    What is Smart Contract Audit

    Until launching it publicly on a blockchain network, a smart contract audit includes investigating the code to find security bugs and weaknesses. The smart contract’s self-executing system makes it very necessary before the start to recognize the bugs and discard the flaws.

    Smart contract audit services will alleviate security problems, such as an unknown execution environment, a new tech stack, deterring contract patching capacity, attackers, and a sluggish speed of development. 

    The time taken for an audit depends upon the scale of the undertaking. A token contract (like ERC20 and others) audit can happen within a few days. On the other hand, it can take 15 days to a month for a complicated project such as a decentralized exchange or a dApp.

    Bugs classification happens as critical, significant, or minor after scrutinizing the document, while also justifying each categorization. The analysis also offers instructions on how to fix the vulnerabilities wherever feasible. 

    Smart contract audit addresses several problems by delivering quick and appropriate reviews on possible questionable contract source code patterns.

    What are the Advantages

    Recently, the trend of decentralized infrastructures has rapidly grown. Thus, there is an increasing demand to perform smart contract audits with rising security issues. 

    • The audit ensures the smooth operation of the code and the Smart Contract. 
    • Smart contract audit’s outcomes guarantee ultra-high protection and trust. 
    • The auditing process enhances the contract’s accountability.

    Also, Read | Hyperledger Fabric Development | A Platform for Smart Contracts

    Smart Contract Audit | Applications

    DApp (Decentralized Apps)

    Ensuring the security and functioning of decentralized applications (DApps) is essential as they are prone to security threats. End-to-end smart contract security analysis enables the identification and rectification of possible vulnerabilities, and thus, ensuring the successful operation of a DApp.

    Decentralized Exchange Platform 

    Auditing the security of your decentralized crypto exchange ensures the viability of the business and supports widespread adoption. Its stages comprise the evaluation of the smart contract-based business logic, data management factors, consumer privacy adherence, and others.  

    Crypto Wallet Security Check

    Audits extensively ensure the protection of private keys, data safety, and the effectiveness of wallet features for digital wallets and enable them to be free from all bugs and weaknesses.

    ICO (Initial Coin Offering)

    Smart contract-powered mechanisms like soft cap, hard cap, and others must operate efficiently to ensure smooth execution of ICO post token sale. Performing an ICO contract audit ensures the operational feasibility of the ICO smart contract.

    STO Projects (Security Token Offering) 

    STO Smart contract audit carried out by experts who understand the laws of different jurisdictions before conducting the audit process ensures the legal requirement compliance for security tokens. 

    Protocol Audit

    The protocol audit requires several measures to ensure full protection of the network, such as encrypting signatures, reviewing business logic, testing the consensus process, and introducing Tokenomics.

    Smart Contract Audit Process Essentials

    Smart contract auditing has two basic approaches: Manual and Automated Code Review. Let’s look at just what each one entails: 

    Manual Code Analysis

    Although there are few rewards for guessing what code manual research entails, this method has a range of benefits. If you have a good-sized production team, the only way to find coding conflicts is to perform a manual review of the smart contract language.

    For scrutinizing it for compilation and re-entrance errors as well as security problems, a manual code analysis would include the team reviewing each line of code. Naturally, the detection of security issues will be on priority as they are the main challenge to the successful long-term execution of your smart contract.

    Automated Code Analysis

    Automatic code inspection has the advantage of saving time for developers while testing their code. Automated code analysis also enables advanced penetration testing that can incredibly rapidly locate vulnerabilities.

    Issues faced in the automated audit are vulnerabilities and code identified falsely, shown as an issue when there is not one. False positives and missed vulnerabilities can lead to complications. Thus, even after conducting automated code testing, developers should always perform thorough manual code analysis.

    Smart Contract Performance-Testing

    Before its public launch, one prerequisite is to ensure performance-optimization of a smart contract code. It is essential for Smart Contract audits to include validation of performance. Otherwise, it can also cost more to execute poorly optimized contracts.

    Validation will include testing the code for any bugs that may slow down or affect other aspects of the functionality of the contract. Developers should emphasize assessing if the contract execution happens in a way that fulfills all the pre-defined agreements.

    For instance, a smart supply chain-based contract can be as one party verifying the distribution of products and releasing the payment in crypto tokens like Ether or XLM. Now, the verification should happen that the contract automatically executes after the successful distribution of products.

    Next is to test for variables in the contract. Since there may be a spectrum of contract triggers and related acts, the contract audit ensures that it can accommodate all the potential changes that might occur from variables. Therefore, the pressure checking of the smart contract for factors that may emerge from how it is applied in the real world often requires inclusion in performance validation.

    Smart Contract Audit | Process Steps

    Collecting and Understanding Requirements

    The first step requires understanding the expected actions of a smart contract code by white papers or company condition records. 

    Performing Automated Testing  

    It requires putting unit test cases to use and checking that smart contracts do not produce syntactic or run-time bugs. 

    Conducting Manual Analysis

    Conducting a manual analysis of smart contracts includes finding, along with the feedback, and critical, major, and minor glitches.

    Original Audit Report Planning 

    A paper is prepared to illustrate the critical, significant, and minor bugs, and engineers focus on refactoring the code and fixing it. 

    Report on Final Audit 

    The original audit report requires editing and the use of the refactored code to prepare the final audit report.

    If you need more information about our smart contract services, book a consultation call with our smart contract auditors.


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About Author

Mudit Kumar (Writer)

Mudit has been working with Oodles since 2017. He writes about technologies that not only disrupt the digital space but also influence the physical world. Initially, he explored revolutionary technologies like ERP (Enterprise Resource Planning) and AI (Artificial Intelligence). Now, he focuses on unfolding the elements of blockchain technology, given its potential and edge over others.

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