An Introduction to Upgradable Smart Contracts

In this article, we will explore why there is a need for these contracts, their fundamentals and different upgradable mechanisms, and more. 

Upgradable Smart Contracts

Upgradable smart contracts are computer programs that enable developers to modify their codes without changing their state, address, and balance. They give programmers the capability to add new features to projects and more. 

A smart contract is an essential part of crypto tokens, decentralized applications (dApps), non-fungible tokens (NFTs), and more. It implements the order by following pre-defined rules. It is immutable and permanent, so developers cannot make any changes. 

But a dApp can have more than one smart contract that works together to provide its backend. It means that developers can enhance the interaction pattern among those smart contracts. Rather than changing the code of a smart contract, developers swap one smart contract for another while upgrading the contract. 

In this way, users do not have to alter how they interact with the dApp.

Essentially, upgrading smart contracts is replacing old smart contracts with new ones. Subsequently, you can abandon old smart contracts and use new smart contracts. 

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What is the Need for Upgradable Smart Contracts

The following reasons may require you to upgrade smart contracts:

Resolving Bugs Found in Production

One of the reasons to upgrade smart contracts is to fix bugs. You may find bugs in the production that may cause a damaging impact. In one instance, a reentrancy bug in a DAO contract enabled attackers to withdraw ethers, causing million dollars loss. 

In such cases, developers have to opt for upgradable smart contracts to avoid any devastating consequences.

Making Improvements to the Product 

Product improvement gives new value to customers with more efficiency, easier usage, and better quality. It also requires you to upgrade the product's underlying smart contract. 

Also, developers can add new features to your decentralized application (DeFi) with logic upgrades.  

Code Optimization

You can enhance code quality and efficiency with code optimization. Subsequently, a program will consume fewer resources and deliver high speed. The process will enable more efficient utilization of Ethereum gas. It also requires upgrading smart contracts. 

Modify Functionality 

There could be some functionalities you no longer require or consider useful. You can modify these services or components by upgrading smart contracts. 

Ensure Safety 

Bugs in smart contracts can lead to security leads. So, smart contract upgrades can ensure end-users safety by conveniently fixing vulnerabilities identified in the post-deployment phase.

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Upgrade Mechanism 

The following are the mechanisms developers can use for upgrading smart contracts:

• Proxy patterns
• Data separation
• Contract Migration

Drawbacks of Upgradable Smart Contracts

Even though upgradable smart contracts provide new functionality, bug fixing, and better user experience, they have some drawbacks. Below are some limitations of upgrading smart contracts: 

Nullifies the Immutability of Smart Contract Code

Conventionally, smart contracts are immutable, so users trust that no one can implement random changes in an application. Users, therefore, interact freely with the dApp. 

Upgradable smart contracts nullify this idea of the immutability of smart contract code. It may raise concerns about decentralization and security. 

Unauthorized Upgrades

Upgrading smart contracts may lead to insecure access control. Malicious actors may execute unauthorized upgrades if they get centralized access to these programs.

Developers may Skip Due Diligence

Due diligence is a critical process to check the technical condition of the product and code quality. There could be a possibility that developers may skip due diligence with smart contract upgrades to launch projects faster. 

Increases Complexity

When programming upgrades functionality into smart contracts, it becomes more complicated. Further, it raises the risk of critical flaws.

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Considerations for Upgrading Smart Contracts

There are the following considerations for upgrading smart contracts: 

• You must include secure access control or authorization mechanisms to avoid unauthorized upgrades. 
• Another thing to consider is that smart contract upgrades demand high diligence to prohibit vulnerabilities. 
• Upgrading smart contracts is a lengthy and expensive process. Typically developers have to deploy a new version of the contract that requires manual shifting of all the states from the old contract to the new one.
• Further, you need to convey the updated contract's address to all the contracts. 

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Conclusion

Smart contracts, like other software, need upgrade with changing requirements. With the right usage, upgradable smart contracts can provide a way for significant improvements. 

If you are interested in changing the functionality of your dApp, then our smart contract developers can assist you. Contact us today to discuss your needs.